WAPA says monthly deficit narrowed to $2–3M but warns of $188M debt and $375M funding gap

The Virgin Islands Water and Power Authority (WAPA) told a Senate committee on March 24 that while its monthly operating deficit has fallen from about $8 million in March 2024 to roughly $2–3 million, the utility still faces large unpaid bills, heavy long‑term debt and a need for substantial capital to fix deferred maintenance.

“The Water and Power Authority remains in a fiscally challenged position,” WAPA Executive Director and CEO Carl Knight told members of the Committee on Government Operations, Veterans Affairs and Consumer Protection. He said the authority now carries roughly $101.7 million in past‑due accounts payable and about $188 million in long‑term debt, with deferred maintenance on generating assets estimated at about $27 million.

Knight said the authority’s operating revenues come only from monthly charges for electricity and water and that the utility has not substantially raised electric rates in nearly six years. Residential electric rates were cited at about 43.4¢ per kilowatt‑hour, up only slightly since 2019. Closing the operating deficit entirely through rates would likely require increases on the order of eight cents per kilowatt‑hour — an outcome WAPA has tried to avoid because of the economic consequences if rates exceed 50¢/kWh.

WAPA’s strategy has been to reduce operating expense and pursue projects that lower fuel and operating costs. Knight said steps include a new two‑year fuel oil contract being finalized at rates below the current contract, an upcoming solicitation for a new liquefied petroleum gas (LPG) provider, additional renewable generation and more battery storage. He said a solicitation will be issued next month to add at least 40 megawatts of replacement capacity at the Holly plant (St. Thomas/St. John) and that FEMA disaster assistance will fund part of that work.

Knight and other WAPA witnesses also described near‑term operating improvements and continuing reliability work:

- Solar and batteries: additional renewable generation is expected this year and next, with solar and battery projects on St. Croix and St. Thomas described as lowering avoided‑costs when they are available.

- Wartsila units: the recently installed Wartsila engines (phase 1/2 units) experienced early faults; two were returned to service and a third was expected by the end of the week of the hearing. WAPA said repairs are covered under warranty and root‑cause analysis is underway.

- Richmond replacement: FEMA approved funding for a full replacement of the Richmond power plant on St. Croix, including at least 86 megawatts of generating capacity; WAPA expects to advertise an EPC solicitation in April.

- Metering and AMI: the authority reported meter‑reading problems (meters that cannot be read remotely and meters with non‑functioning displays) and said it selected Itron to replace the automated metering infrastructure (AMI) under FEMA’s prudent replacement program. Knight said the AMI start date is expected around July 1 and a full territory rollout could take about 18 months; in the meantime WAPA reported replacing thousands of meters funded by FEMA.

Billing accuracy and legal limits on backbilling drew sustained scrutiny. WAPA said many bills are estimated because remote reads fail; staff and senators described the effect on customers when large true‑ups appear after months of estimates. WAPA noted that current law limits backbilling to 35 days, and Chief Financial Officer Lorraine Kelly told the committee the 35‑day limit prevents the authority from recovering amounts older than that even when meters later prove customers were underbilled. WAPA has asked the legislature to consider amendments tied to backbilling, reconnection fees, competitive‑bidding rules and other provisions.

Knight said WAPA has engaged a municipal financial adviser and that the turnaround management consultant commissioned by the Legislature recommended a five‑year cash infusion of about $375 million to resolve liabilities and fully restore fiscal stability. He said the authority is working to improve billing and collections, finalize new fuel and supplier contracts, bring additional renewable resources online and pursue debt consolidation and refinancing once financial audits and reporting are current.

What they told senators and what to watch next

WAPA provided a list of legislative proposals it plans to share with the committee, and identified the two priorities it said are most financially critical: changes to street‑lighting funding and backbilling rules. WAPA also flagged its deferred fuel balance and under‑recovery of fuel costs (the authority estimated an under‑recovery of about $130 million for fuel over recent years) as a likely point of discussion with the Public Services Commission and in regulatory proceedings.

WAPA emphasized that many resilience projects are federally funded and that demonstrating stable financial reporting will be important to access refinancing and market options. The authority also stressed the need for coordination with the Public Services Commission on rate treatment of pass‑throughs and deferred fuel balances.

WAPA said it will provide white papers and legislative suggested language to the committee for future consideration and confirmed it stands ready to provide further data requested by senators.

Ending

Senators pressed WAPA officials on meter replacement timetables, overdue vendor payments, staffing, and projected customer savings from new generation. WAPA leaders said they expect incremental improvements in the next year but warned that meaningful rate relief will depend on debt restructuring, improved collections and the pace at which federally funded generation and battery projects come online.