Financial stability restored after 'crisis' at WAPA

Financial stability was restored to the U.S. Virgin Islands Water and Power Authority after a "crisis" that lasted the first nine months of 2024, its chief financial officer told the board of directors Thursday.

"We still have tight liquidity circumstances going on and we are still managing cash on literally a day-to-day basis," said WAPA CFO Lorraine Kelly. "I will say things have improved."

The authority now has a $100 million accounts payable balance that has remained steady for the last few months, Kelly said.

By comparison she said, "during the crisis we had" in the first nine months of last year, the authority's accounts payable was increasing by about $1 million to $2 million per month in January through March and $1 million to $2 million per week in April through June.

"Stabilization is good for us," Kelly said. While the authority is still deferring certain critical vendor payments, it can now pay some larger vendors and make partial payments to some smaller vendors, while paying most new debts as they come due.

WAPA CEO Karl Knight said the introduction of four engines from Wärtsilä in a power plant serving St. Thomas and St. John resulted in operational savings of $2.2 million in December, with savings expected to increase as the engines get used more extensively.

The engines, which use cheaper fuels — either liquid propane or diesel — allow the authority to reduce its use of diesel at other plants.

The authority also started operations of the Petronella Solar Farm in St. Croix in December. It first provided 4.75 megawatts, now provides 7.5 MW, and is expected to ramp up to 10 MW soon. The farm is supported by a battery energy storage system that absorbs excess production during sunny times and releases electricity when the sun isn't shining. Knight said the authority hasn't yet determined the financial impact.

Finally, Kelly said the authority has started to see financial benefits from the installation of new electric meters on the island. The authority will receive another 2,500 meters to install in a few weeks, which will provide savings.

The installation of the Wärtsilä engines is "a milestone that promises hope for the Virgin Islands, a promise of more reliable power, more affordable electricity, and a future built on sustainability and resilience," Senate President Milton Potter said at a ribbon-cutting ceremony.

As of May 31, the authority's electric system had liabilities, including those payable from restricted assets, of $562.2 million. It had $178.6 million in electric system revenue bonds due in more than 12 months plus about $20 million in bond principal and interest payable due in less than 12 months and $1.157 billion in total liabilities.

Moody's Ratings withdrew its Caa2 rating of WAPA and Fitch Ratings withdrew its CC rating in 2023, both citing a lack of up-to-date audited financial information. The May 31 data is unaudited.