ST. CROIX — The Virgin Islands government has stopped subsidizing the VI Water and Power Authority after providing significant financial support from federal and local funding sources to keep the cost of electricity from increasing, according to two executive branch officials.
The government was able to utilize $100 million in federal funds received through the American Rescue Plan Act to prevent WAPA rate increases by implementing the fuel subsidization program from March 2022 to June 2023, according to Government House.
“During that time, the price of oil was skyrocketing,” Kevin Williams, chief of staff to Governor Albert Bryan Jr., said while discussing the subsidization program. “It was meant to keep the fuel costs stable so that WAPA wouldn’t have to pass those costs that they’ve traditionally done on to the consumers.”
The executive branch also spent local funds to subsidize WAPA, making its final subsidy payment last month before the Senate ended the state of energy emergency the governor declared on April 22, 2024.
READ MORE: “Bryan declares state of emergency, paid $2.3M WAPA debt today; Senate calls for accountability”
The financial assistance the government provided to WAPA in the form of monthly subsidies allowed the Authority to complete its anticipated project on St. Thomas to bring online four fuel-efficient generators manufactured by the Finnish company Wärtsilä that can function on diesel or propane.
“WAPA is definitely trying to straighten out some of their cash flow management, their collections and billings that will also aid them in meeting their monthly obligations,” Williams said. “So, we’re no longer subsidizing WAPA, and we’re hoping that they can pretty much continue to run on their own.”
The governor’s state of emergency declaration included the formation of a task force to finalize the installation of the new generators on St. Thomas, complete the Vitol transaction to shift operations to propane, and activate more renewable energy.
The commissioning of the Wärtsilä generators in the Randolph Harley Power Plant last Friday on St. Thomas was critical toward improving WAPA’s operational efficiency by reducing fuel costs, but the savings those generators will realize is just one aspect of the Authority’s operations that led to the end of the government subsidies, according to Kyle Fleming, VI Energy Office director. He stressed WAPA’s improved collections were also instrumental in positioning the Authority to no longer depend on subsidies.
“Being more efficient at essentially every level of the operation while having that subsidy bridge to cover that gap so that way there wasn’t additional burden placed on the community has been overall strategy,” Fleming, who is a member of the WAPA governing board, said. “And where we’re at right now is certainly yielding the intended result of being able to allow for the Authority to operate more so within its own means without that high dependency on the subsidy to even just keep the lights on.”
Williams noted the recent completion of the Estate Petronella solar and battery storage project on St. Croix as another component toward diversifying the energy mix. He said the introduction of the new solar arrays onto WAPA’s grid has allowed the Authority to turn off an inefficient fuel-operated generator.
“They’re becoming a more efficient operation, which you know helps to bring down cost, eliminate waste, and make them a more leaner Authority,” he said. “So, it’s really not a one thing. And really and truly, a lot of what we’re doing here in the Virgin Islands is really through diversification.”
Further discussing the efficiency of operations at WAPA, Fleming said the Authority’s leadership team is now able to focus on things that advance the utility opposed to primarily concentrating on making payroll or purchasing fuel. He said WAPA executives can now dedicate the necessary resources to creative problem solving or communicating with federal partners to make sure projects are moving forward.
“We’re freeing up bandwidth that allows for the actual operation to exist and not just be in this survival mode, which have been historically the case for the Authority,” he said.
Now that the government will no longer subsidize the cost WAPA pays for fuel, Williams said the price ratepayers pay for electricity will not increase. He said the cost of energy has not increased during the first six years Bryan has been in office.
“Everything we’ve done is to try to lower those rates or keep them constant,” he said. “We think WAPA is in a good projection to either keep those rates or reduce the rates in the future.”
Fleming pointed out the Authority’s move away from fuel dependence to instead utilize propane and renewables has resulted in tangible improvements in the area of efficient power generation.
“A more diversified energy mix has allowed the Authority to establish a foundation in which that reduction in cost can be realized in due time, but I think we have a much better position today than we were when the subsidies initially began,” he said.
