Bonds

WAPA’s financial position said to be worst in more than 30 years

The U.S. Virgin Islands Water and Power Authority’s financial situation is the worst in more than 30 years, one board director said Thursday.

Board Director Hubert Turnbull made the remark at the board’s monthly meeting as a prelude to asking CEO Andrew Smith to explain the authority’s financial situation. WAPA had to turn to the governor a month ago for a roughly $20 million to $25 million emergency bail out to pay immediate expenses.

Before Moody’s Ratings and Fitch Ratings withdrew their ratings on WAPA in the past two years because of lack of up-to-date information, they cited the authority’s lack of cash on hand as one of its biggest credit weaknesses. Before the withdrawals, the senior electric revenue bonds were rated Caa2 by Moody’s and CC by Fitch.

The U.S. Virgin Islands Water and Power Authority suffered a series of power outages in the past three weeks.

Smith said after the authority’s operating costs are paid, there isn’t any money left for facility maintenance.

The authority has been plagued by a series of power outages in the past few weeks, some of which were blamed on a propane supply valve leak and a fuel filter failure.

Power generator gas turbine major maintenance, which is supposed to occur every two years, is seven to 12 years past due, Smith said, because of a lack of money and no back-up generation if a unit were to be pulled out of service for maintenance.

Since about 70% of the authority’s operating money is spent on fuel and its transportation, Smith said, his focus is on trying to move toward cheaper fuel types.

The authority currently loses up to $25 million a year in revenues for its produced electricity, partly due to “line loss,” diminishment of electricity as it is carried from the power plants to customers, and partly due to defective electric meters.

Smith said the authority is taking steps to track down and replace defective meters, which will ultimately reduce the authority’s $25 million annual losses by 50% to 80%. He couldn’t say how long this would take.

According to unaudited figures, as of September WAPA had $15 million of current liabilities on bonds, $470 million of current liabilities, $179 million of long-term electric system review bond debt, $284 million of total long-term debt, and $1.081 billion of total liabilities. WAPA has not made more recent unaudited figures available.

In April U.S. Virgin Islands Gov. Albert Bryan Jr. declared a local state of emergency to stabilize the islands’ electrical system and pay WAPA debts because various government-dependent agencies reportedly had not been paying their bills.

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