ST. THOMAS — Senators drilled down on officials from the Virgin Islands Water and Power Authority for updated information during an emergency committee meeting Wednesday on St. Thomas to address the Authority’s financial crisis that led to recent, territory-wide rotating power outages.
The Committee on Budget, Appropriations and Finance emergency meeting held in the Earle B. Ottley Legislative Hall came on the heels of Governor Albert Bryan Jr.’s declaration of a state of emergency Monday. It also followed a press conference the Legislature held Tuesday.
READ MORE: “Bryan declares state of emergency, paid $2.3M WAPA debt today; Senate calls for accountability”
The governor’s declaration allowed him to immediately access $2.3 million from the government’s Budget Stabilization Fund to pay the debt WAPA owed Aggreko for a leased generator on St. Croix so the unit could come back online and prevent the need for rotating outages. Even though the Aggreko unit came back online, rotating outages continued this week on St. Croix until repairs could be completed Wednesday to one of WAPA’s generators — Unit 20.
While WAPA was behind in payments to Aggreko, various central government agencies and semiautonomous agencies owe the Authority money for past due utility bills.
“The word of the day, colleagues, is amounts — amounts due, amounts paid, amounts owed, but frankly speaking nothing said today by WAPA amounts to a state of emergency,” Senate Majority Leader Kenneth Gittens said.
Gittens said he was convinced that WAPA and the Bryan-Roach administration are working in collusion with each other, pointing out rotating outages that occurred this week on St. Croix ended with repairs to Unit 20.
“This is extortion people,” he said. “You got your check today and all of a sudden, the rotation is over. Last week the same thing — $4 million paid; the rotation ended on St. Thomas.”
Bryan said Monday during a special briefing from Government House on St. Thomas that three semiautonomous agencies — the Virgin Islands Waste Management Authority, Governor Juan F. Luis Hospital and Medical Center, and Schneider Regional Medical Center — owe WAPA over $11 million.
Senators primarily questioned WAPA officials during today’s meeting despite having representatives from VIWMA and both of the territory’s hospitals in attendance. Management and Budget Director Jenifer O’Neal and Finance Commissioner Kevin McCurdy declined an invitation to testify given the governor’s state of emergency declaration.
Senate Minority Leader Dwayne DeGraff questioned WAPA about the need for a continued state of emergency now that Aggreko has been paid and rotational outages have stopped. He successfully moved to subpoena the OMB director and Finance commissioner, as well as Daryl Jaschen, VI Territorial Emergency Management Agency director, to appear before the committee. His motion was approved by a 4 – 1 vote, with Senate President Novelle Francis Jr. voting against it.
Francis, committee vice chair, indicated via text after the meeting that he voted against the motion because it was not discussed with him, and he didn’t know its purpose considering the full body is scheduled to meet in an emergency legislative session today.
“The motion was open ended at the call of the chair; no other specifics,” Francis texted. “A subpoena requires my signature, and I should have been advised of the intent.”
Senator Donna Frett-Gregory, committee chair, who voted to approve the motion, briefly discussed it after it passed.
“We’re gonna have to determine if that motion is still effective tomorrow in session,” she said Wednesday.
WAPA’s failure to timely pay Aggreko resulted in the company shutting off the leased generator on April 15, forcing the Authority to implement rotating power outages because it could not meet peak demand without it, according to Andrew Smith, WAPA chief executive officer, who participated in the meeting virtually from outside the territory.
Bryan immediately reached out to Aggreko to get the generator back online pending receipt of the $2.3 million payment, which the executive branch made to WAPA Tuesday. Smith said WAPA paid Aggreko Wednesday.
Smith, while updating senators on the Authority’s “current financial crisis and associated recent rotating power outages,” said WAPA needs three generators online on St. Croix to meet peak demand during certain hours of the day. WAPA has four generators on St. Croix, one of which it leases from Aggreko, Smith said. He said one of WAPA’s generators, Unit 19, is temporarily out of service for maintenance so only three generators are online. When Aggreko shut down its generator, Smith said WAPA only had two operating generators, so it had to schedule rotating outages.
Rotating outages occurred on St. Thomas, too.
Smith said WAPA deferred payment for a supply of diesel for St. Thomas to pay for a shipment of propane because it didn’t have enough cash to pay for both. When WAPA was ready to purchase diesel, he said the barge couldn’t travel from Puerto Rico due to bad weather. Since the diesel couldn’t be delivered, he said WAPA was forced to enter a rotation outage scheduled from April 12 to 14.
Even though WAPA has since paid Aggreko and purchased diesel to prevent rotating outages, the Authority still owes other vendors money.
“I would continue to say that the Authority is in a challenged position as far as its operations,” Smith said in response to DeGraff’s inquiry regarding the need for a continued state of emergency.
Part of the reason WAPA is behind in its payments to vendors is because the government owes the Authority.
The central government and government component units are collectively WAPA’s largest customer, representing 25% of the Authority’s revenue, Smith said. He said the amount of past due payments owed to WAPA reached $24.2 million at the end of February, noting that the outstanding past due balance has not declined materially since then.
“To put the impact of non-payment in context, I noted earlier in my testimony that WAPA’s typical monthly revenue is approximately $21 million,” Smith said. “The amount owed by WAPA’s largest customer exceeds more than one month of the Authority’s total revenue.”
Frett-Gregory was surprised by the testimony.
“That is news to the Legislature,” she said about the $24.2 million government debt to WAPA. “We were not aware of that.”
Frett-Gregory continued to question Smith and WAPA Interim Chief Financial Officer Lorraine Kelly about how much each central government agency, semiautonomous agency, and federal government agency owes WAPA.
The semiautonomous agencies that participated in the meeting updated senators on the amounts owed to WAPA.
VIWMA owes WAPA about $3.8 million, according to VIWMA Deputy Executive Director Luis Sylvester. As of this fiscal year, he said OMB sets aside $200,000 a month from the VIWMA allotment for WAPA. Sylvester testified on behalf of VIWMA Executive Director Roger Merritt Jr., who is on leave.
SRMC owes WAPA nearly $2.8 million, according to Tina Comissiong, the hospital’s CEO. She said $275,000 is garnished from the hospital’s monthly allotment and paid directly to WAPA. She said the administration recently reprogrammed $1 million in American Rescue Plan Act funding that was earmarked for SRMC’s retention and information technology initiatives to WAPA to pay down the hospital’s outstanding balance.
JFL has not been able to pay its full obligations to WAPA for the past several years, according to Doug Koch, the hospital’s CEO. He said OMB allots $250,000 to WAPA on behalf of JFL monthly, resulting in $3 million in annual payments to WAPA. He said the hospital’s WAPA bill ranges from $256,000 to $581,000, noting JFL conducted a true-up in December 2021 and paid WAPA $1 million to cover its outstanding balance. He said, however, the addition of JFL North has significantly increased energy consumption, acknowledging the annual payment of $3 million is not enough to cover the expenses.
Various government agencies also owe the hospitals. Senators learned JFL is owed $6.8 million from various agencies, while SRMC is owed $5.6 million.
After hearing that several government agencies owe the hospitals, Frett-Gregory said the question is what the Legislature is going to do. She said the reason she invited the semiautonomous agencies to testify was because senators wanted to hear about their challenges as well as why they were not making their WAPA payments. She pointed out an emergency legislative session to address the WAPA financial crisis was scheduled for today.
“I am prepared to do what is necessary,” Frett-Gregory said.
