USVI senator proposes WAPA bankruptcy or takeover

U.S. Virgin Islands Sen. Ray Fonseca said the Water and Power Authority should either start bankruptcy proceedings or be subject to a federal takeover. 

Fonseca said the troubled utility should consider filing for Chapter 9 bankruptcy, for which attorneys have said the authority is currently not eligible. 

“The people of St. Thomas have endured blackouts, inflated bills and broken promises for too long,” Fonseca said in a post to his Facebook page. “The people of the Virgin Islands deserve reliable, affordable and transparent utility service — and after decades of neglect, it’s clear that WAPA, even with substantial assistance from the government of the Virgin Islands, still needs additional resources and technical assistance.” 

The utility owes vendors about $400 million and has liabilities of more than $1 billion, Fonseca said. To resolve this, it “may need to seek Chapter 9 insolvency.”

Other issues he cited include: major systems — including power generation, transmission, and billing — are failing; fuel costs are uncompetitive and solar and emergency capacity inadequate; customer service is poor and meter readings and bills are frequently incorrect, vendors are being paid late, resulting in inventory shortages and service interruptions; and community confidence is at an all-time low.

“Management inefficiencies, poor maintenance practices and frequent equipment failures continue to cripple daily operations,” Fonseca said, adding, WAPA has deferred maintenance and needs an estimated $27 million to fully maintain its infrastructure. 

WAPA’s bond rating has plummeted, reflecting a loss of financial credibility and long-term stability, he said. In fact, WAPA has no bond rating since Moody’s Ratings and Fitch Ratings have withdrawn their ratings. 

“Bankruptcy is not an option for WAPA because neither federal nor Virgin Islands law authorizes it to file for relief under Chapter 9 of the U.S. Bankruptcy Code,” according to a WAPA spokeswoman. “In addition, the authority is unaware on what basis Sen. Fonseca reached those conclusions, no discussions have taken place with the WAPA management team and Sen. Fonseca’s office.”

In February, a consultant’s report said WAPA couldn’t pay its debt without a $375 million inflow. 

As of the end of December WAPA had $175 million in bond principal due and $970 million in total liabilities, according to unaudited figures posted to the MSRB’s EMMA web site. 

U.S. Virgin Islands Gov. Albert Bryan, Jr., two other Virgin Islands senators, U.S. Virgin Islands Public Services Commission Chair David Hughes, and U.S. Virgin Islands Delegate to the U.S. House of Representatives Stacey Plaskett didn’t immediately respond to requests for comment.