Committee of the Whole senators questioned VI Water and Power Authority officials for hours on Monday and expressed dismay at the ongoing financial crisis and lack of accountability for bad decisions that cost the government millions of dollars. authority and may even constitute criminal conduct.
Senate Speaker Donna Frett-Gregory explained that the Legislature intends to hold the hearing following Inspector General VI’s November audit report into WAPA’s disastrous contract with the service provider. Vitol fuel. But senators agreed to delay the hearing at the request of WAPA Board Chairman and Energy Office Director Kyle Fleming so that new CEO Andrew Smith could have more time to familiarize himself with the operations.
Senator Alma Francis Heyliger read excerpts from the report and said that, based on the Inspector General’s findings, “a lot has gone wrong. Not a little, millions of dollars gone wrong.
The report revealed that WAPA’s board and management chose to cut corners in an attempt to speed up the process, with the aim of reducing energy prices by switching from fuel oil to less liquid propane gas. dear.
WAPA hoped to complete the fuel conversion project in two years, by February 28, 2015, at a cost of approximately $87 million. WAPA officials said switching to LPG was expected to save 30% or $90 million a year.
The total cost of the project ultimately exceeded $200 million and only 80% of the territory’s generators currently run on propane. Smith said Monday that officials had not determined the actual cost savings of the project, but he pointed out that fuel oil is 78% more expensive than propane to create the same amount of energy.
Senator Milton Potter asked if the project was ultimately worth the expense.
“I can tell you today that propane is significantly cheaper than oil. Was it the right decision to use Vitol? That’s where we are today,” Smith said.
Fleming, who was elected chairman of the board in July, said he could not speak about decisions made by previous officials, but the board has tightened protocols to ensure contracts are properly vetted for sufficiency. legal.
“From what you say, this council does not know what happened and they are not held responsible. I understand,” said Francis Heyliger.
Smith said the Inspector General’s recommendations have been implemented and more reforms are coming.
The Public Utilities Commission must ultimately review and approve or deny WAPA’s rate increase requests, and Smith said the current plan is to avoid the need for such requests.
“We do not intend to seek a rate increase,” Smith said.
Smith has been in office for four months now and told senators he has a plan to clean up WAPA’s finances, but declined to provide details, citing ongoing negotiations with vendors.
“We have inefficient generation on both islands,” Smith said, with an estimated power line loss “north of 10 percent.”
The projected fuel economy numbers “would be very valuable information to know if you’re trying to sell us or lease more efficient production,” Smith said.
Senator Novelle Francis Jr. said WAPA continues to suffer from a “clear lack of transparency,” a sentiment shared by other senators throughout the hearing.
“You can’t come before the Senate and say you have a strategic plan that you can’t share,” Frett-Gregory said.
“We will absolutely share the results of the business process we’re going through once we’ve completed this,” Smith said.
Broadly, the first stage of the plan is stabilization, then transformation in terms of debt and other long-standing challenges, and “Phase 3 refines organizational operations,” Smith said.
Frett-Gregory said senators should be given the opportunity to review WAPA’s full plan, and Senator Kenneth Gittens requested a copy of the plan with the numbers redacted.
Overall, Smith said that despite receiving $8 million through the American Rescue Plan Act, WAPA is not collecting enough revenue to cover expenses and “it’s not sustainable.”
The senators asked for more details on Smith’s ideas for overhauling various aspects of the Authority’s operations, but “if we don’t stabilize the business financially, the rest of these issues will never be resolved,” Smith said.
Its main objective in the first year is to “prevent the Water and Power Authority from running out of money”, which means tackling the spiraling fuel costs and inefficiencies that conspire to keep WAPA from running out of money. not enough money to pay debts, including employer contributions to government. Employee pension plan.
The GERS Board of Directors has been sounding the alarm for months that not only does WAPA owe employer contributions, but the Authority also collects pension contributions from employees’ paychecks and does not remit these amounts, and even voted to allow administrator Austin Nibbs to file a lawsuit against WAPA. .
Including penalties, interest, and costs, WAPA owes GERS $2.65 million in employee withholding, $4.9 million in employer rebate, and there is a balance of $361,000 outstanding loan that “is also being processed,” Smith said.
WAPA recently resumed paying employee dues to GERS after not doing so since June, and Smith said the money was being used to fund other WAPA expenses.
Frett-Gregory expressed shock.
“Wow, I didn’t know that,” she said. “Are the employees still working at WAPA who made these decisions?”
Smith said some left.
“They have to go. It’s wrong. This is unheard of,” Frett-Gregory said.
Several senators said the situation constituted a fraud and called for an investigation into possible criminal offenses.
Senators asked about employee salaries, and human resources director Sabrina King-Leonce said the chief financial officer’s special adviser earns $152,900, the treasury director earns $108,211, the comptroller earns $92,600 and the CFO earns $180,000, within three years. one-year contract which also includes an annual housing allowance of $45,000 and an annual education allowance of $25,000.
Smith said the chief operating officer earns a base salary of $230,000 per year, plus an annual housing allowance of $45,000. Smith said his own base salary as CEO was $325,000 per year, plus an annual housing allowance of $45,000.
King-Leonce said “there are also performance-based discretionary bonuses attached to the chief executive and chief financial officer,” but Fleming said the board has yet to decide how those bonuses will be determined.
Frett-Gregory said they should have figured out “whatever that metric is. It is very strange for me.
In terms of net metering, Fleming said he received 300 new applications “but unfortunately it was a challenge” getting them through the vetting process.
The struggling Automated Metering Infrastructure, or AMI system, has gone from 80% customer meter coverage to 70% over the past year and a half, and “we are seeing some components failing over time. as we progress and time goes by, then we are actually seeing a system failure,” said Julius Aubain, Chief Information Officer of WAPA.
This means WAPA has to send more staff to physically read meters, and while there are enough staff available to do so, Smith said the Authority is still working to repair its fleet of vehicles, which have suffered. from a lack of maintenance.
The senators did not ask for an update on the percentage of customer bills estimated by WAPA, but Smith told the Daily News after Monday’s hearing concluded the number had risen from more than 8% ago. a few months at 7.3%.
Smith acknowledged that WAPA still has a long way to go before it falls below the 2% threshold required to trigger additional federal funding from the US Department of Housing and Urban Development.
Sen. Dwayne DeGraff asked about employee morale during Monday’s hearing.
“It’s bad,” Smith said. Although the staff are proud of their efforts, “due to our financial situation, we are not able to provide the right tools, uniforms, everything that contributes to a good quality of life at work. And we are working to solve this problem.
Regarding the challenges Smith faces, DeGraff was candid, “WAPA is a major issue here. I want you to understand, you’re in a hornet’s nest, naked, with honey all over you.
Senator Franklin Johnson asked if WAPA was on the verge of bankruptcy.
“We’re not. However, I would tell you it’s a rubber band that’s stretched as hard as it can go. And if you pull it any harder, it’s going to snap,” Smith said.