The first level of federal approval needed for the V.I. Water and Power Authority to fully acquire Vitol’s propane infrastructure came through Tuesday night, though there are a few more steps to go before the necessary funding is released, according to government officials.
In April, Gov. Albert Bryan Jr. called the Legislature into special session to vote on a bill authorizing a $145 million line of credit needed to complete the deal. The bill was amended and the line of credit reduced to $100 million, of which $45 million was used in May to make a first payment to Vitol as part of a negotiated settlement agreement for control of the propane terminals at the authority’s Randolph Harley plant on St. Thomas and Estate Richmond on St. Croix.
The matter came to a head last November when Vitol suspended propane deliveries over the payment dispute, forcing WAPA to revert to more expensive diesel and to purchase spot-market, or short-term, propane supplies.
The funds pulled from the line of credit were expected to be repaid through the V.I. Housing Finance Authority’s federal Mitigation grant, but getting access to the money required the submission of an amendment to the grant’s action plan and several layers of approval by Housing and Urban Development, officials said.
HUD’s greenlight on the amendment was announced Tuesday, with VIHFA Interim Executive Director Dayna Clendinen explaining in a news release that the next steps forward require WAPA’s “commitment to maintaining lower fuel prices, increasing fuel security, and addressing the vulnerability of the territory’s fuel storage to future storms and disasters.”
“VIHFA, as HUD’s grantee, is responsible for monitoring WAPA, ensuring that the utility: publishes its utility reliability metrics; demonstrates the financial ability to maintain and operate the propane infrastructure throughout its useful life (20 years); maintains the territory’s access to multiple fuel sources; and ensures that WAPA is using its most reliable modern generators to facilitate increased power reliability,” according to Clendinen.
Next, VIHFA will submit its policy and procedures for administering the funds to HUD for review and approval. VIHFA will work with WAPA to finalize the application and proceed with an environmental review, ensuring that all federal and local regulatory requirements and performance metrics are met, the release said.
Heralding the decision, the governor said HUD’s approval “marks a significant milestone in the administration’s ongoing efforts to enhance the V.I.’s energy infrastructure and improve the delivery of utility services to its residents.”
“With the acquisition of the LPG assets from Vitol, WAPA will gain greater control of the fuel supply and management of fuel costs,” Bryan explained in a news release. “Control of the propane facilities will enable WAPA to refocus efforts toward executing its strategic priorities and resiliency projects, which include the significant expansion of renewable energy integration into the grid.”
Bryan added, “There is no easy fix to a system that has been broken for 60 years. It takes commitment, diligence, political courage, and, most importantly, working together. I want to again thank the members of the 35th Legislature who supported the legislation approving the line of credit needed to complete this plan and the leadership teams at HUD, VIHFA, and WAPA for their diligent efforts, which helped us achieve this milestone.”
