The initial budget the Water and Power Authority financial team came up with for the electric side of its operation had it spending about $135 million more next fiscal year than it was expecting to take in.
But when the team showed up for the governing board meeting Thursday it had brought the budget down to $255 million to match its revenues.
Getting the budget to balance was not done only with drastic cuts, a $48 million subsidy from the government helped, too.
The budget proposal does not include any federal funds or, more critically, any payments to Vitol for infrastructure.
Board member Hubert Turnbull complimented the team for presenting the budget in a manner that was easily understood.
Jacob Lewis, who became the chief financial officer in April, also presented a $32 million budget for the water side. It includes cuts of a couple hundred thousand dollars.
The water side proposal shows an increase in personnel costs from $6.2 million to $6.5 million while on the electric side, there was a significant cut from $53.6 million to $36.6 million.
After hearing about that cut, Turnbull asked if that meant that workers would not get the raises promised them.
Lewis said they would get the raises and that the main cost-cutting measure was a “soft hiring freeze.” He defined a soft hiring freeze as only filling the most critical positions when vacancies opened.
At the end of the meeting, CEO Andy Smith said he wanted to put the budget in perspective and that included a comment about personnel costs. He said while personnel costs in many government agencies run about 60 percent of the total budget, personnel costs were only 13 percent of WAPA’s budget. He said WAPA’s fuel bill is larger than the Department of Education’s whole budget.
On the electric side, the initial proposal called for $29.2 million in capital expenditures, but the scaled-down version would only have $9.7 million in expenditures.
Lewis assured the board that the funds were needed for the repair of three transformers that were keeping three substations (two on St. Thomas and one on St. Croix) offline. The board had approved a contract for the work on the transformers earlier in the meeting. The Federal Emergency Management Agency will pay for the repair at the East End substation on St. Thomas, but WAPA will have to pay $168,000 for the repair of the other two.
Ashley Bryan, director of transmission and distribution, said the repair of the transformers was critical to “return stability to the electric system.” She said buying new transformers would take three years because of shortages.
The board also approved $241,000 in additional spending for the Cruz Bay project to put power service underground. Archeological monitoring became necessary after four bodies were discovered during excavations last year at the western tip of the town’s historic district. The funding will be used, among other things, to rebury those bodies and any others that might surface.
In October of 2021, the board approved increasing the cost of the first phase of that project by $448,910 and extending the time in which the work will get done by 34 weeks, for a new completion deadline of July 2022. On Thursday the board approved extending the contract with Haugland VI until the end of the year. The project was initially expected to last 38 weeks and cost just shy of $12 million.
The board approved the release of the WAPA’S 2020 audited financial statements Thursday. The release of WAPA’s 2020 audit will bring the utility closer to being current, according to Lewis, and WAPA plans to catch up on all its financial audits by 2023.
Board members attending Thursday’s meeting were Kyle Fleming, Juanita Young, Joel Lee, Cheryl Boynes-Jackson, and Elizabeth Armstrong.