Published: October 19, 2012
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ST. THOMAS - Facing a wave of criticism from a business community reeling from high utility rates, V.I. Water and Power Authority Executive Director Hugo Hodge Jr. took his case to the St. Thomas-St. John Chamber of Commerce on Thursday morning, arguing that WAPA is doing all it can to improve the territory's energy future.
"All that we can control, we have done," Hodge said.
The centerpiece of WAPA's plan is to reduce its dependence on crude oil as a fuel source. WAPA has blamed rising oil prices and the closure of HOVENSA, which provides fuel oil to WAPA at discounted rates, for the most recent 20 percent increase in rates that took effect Oct. 1.
Hodge compared WAPA's process of selecting alternative fuel sources to a shopper looking for a good parking space at the mall.
You can circle the parking lot looking for a space up front, but if there are no spots, you have to park in the back of the lot, he said. When you come out of the mall later and see an open spot up front, it makes little sense to ask why you did not park there in the first place.
"Just because the space is there now doesn't mean it was there four hours ago," Hodge said.
For every plan discussed Thursday, Hodge also cited the limitations to each.
"New technology is not going to be easy, primarily because of our size," Hodge said.
Hodge said WAPA does not have the luxury of being able to test a new fuel source on a large scale because there are no backup grids such as those on the mainland; if the experiment backfires, the whole territory could be without power.
Instead, WAPA is hoping to attack the problem in smaller pieces that could provide about 3 percent to 5 percent savings each, according to Hodge. The alternative fuel sources discussed Thursday included:
- Liquefied petroleum gas - LPG - and liquefied natural gas - LNG. Though WAPA has an outstanding request for qualifications soliciting LNG and LPG providers, Hodge said that the natural gas market is undergoing radical changes as the United States gets more involved. While WAPA suspects this will help make LNG a more financially viable option for the territory than it would be in the current market, there is no guarantee this will happen, according to Hodge.
- Wind. Hodge said WAPA is ready to begin gathering data for a potential 7.5-megawatt wind turbine.
- Biomass. WAPA could generate about 6 megawatts per island on St. Croix and St. Thomas by burning plant material, Hodge said.
- Interconnection with Puerto Rico. The $100 million-plus project to connect the territory's power system with Puerto Rico's electric grid is still on the table, according to Hodge. He said WAPA is looking into federal funding sources that could help make the interconnection a reality.
- Solar. In June, WAPA announced six purchase power agreements with three firms to develop utility-scale photovoltaic panels with a rated capacity of 18.3 megawatts for St. Thomas and St. Croix combined. The agreements would allow WAPA to provide electricity at about 17 cents per kilowatt hour. Hodge said the panels should be online by the end of 2013.
Hodge also blamed "special interests" for helping kill a deal last February with Alpine Energy that would have allowed the territory to convert solid waste into electricity. Hodge said if that plan had gone through the Senate, WAPA customers would be paying 20 to 30 percent less for electricity.
Hodge, who began his presentation by referring to himself as "the official community punching bag," also spent much of the meeting blaming "misleading" information in the media - specifically newspapers and radio talk shows - for the recent outcry against WAPA's rates.
"These are people you wouldn't hire to work in your business, but they're dictating policy," Hodge told the group of about 15 Chamber members.
When asked for an aggregate cost-savings if all of the proposed alternatives work as planned, Hodge said ratepayers could hope to save 30, 35 or maybe as much as 40 percent.
"But there are a lot of unknowns," he said. "I have to tread lightly there."
Chamber member Tom Brunt IV, of MSI Building Supplies, said he feels Hodge often is blamed unfairly for problems with WAPA that are rooted in decisions made, or not made, decades ago.
"He's in charge when the music has stopped and the chairs have been pulled away," Brunt said.
When asked whether Hodge's proposal to trim 30 percent to 40 percent from energy costs during the next two years - considered in light of WAPA's recent 20 percent rate increase and the likelihood that the price of oil will continue to rise during those same two years - is not yet another example of too little too late, Brunt looked at the alternative.
"We may be treading water, but if we didn't do it, power would be 75 cents or a dollar per kilowatt hour," he said. "So maybe we have to tread water."
- Contact reporter Lou Mattei at 714-9124 or email email@example.com.