U.S. Virgin Islands legislature can reshape WAPA board, court affirms

The U.S. Virgin Islands Supreme Court upheld a 2021 law reshaping the Water and Power Authority's governing board, a ruling that may be a credit positive for the struggling authority.

"Clearly this is a first step in reforming the operations at WAPA," Muni Credit News Publisher Joseph Krist said last year after an earlier Superior Court decision. "The existing structure along with the politics was not going to solve WAPA's problems. If the new board is open to change and not tied to the status quo, there is a huge opportunity to affect real improvement to the power system and the economy. It should be credit positive."

"This is a step in the right direction and I will continue to push for reform," said Senate Majority Leader Kenneth Gittens, one of the act's sponsors. "At last, we have decisive win for the ratepayers and we can continue to push for greater accountability at the utility."

The court released its ruling Tuesday, upholding Act 8472, affirming a 2023 ruling by the Virgin Islands Superior Court.

The law requires board members to have greater expertise in energy, technology, economics, and finance; reduces to seven from nine the number of members; and deletes the requirement that three members of the governor's cabinet are on the panel.

Gov. Albert Bryan sued in 2021, arguing the law impinged on his prerogative to appoint those he wished to the board.

Neither Bryan's nor WAPA's spokesperson immediately responded to a request for a comment.

In other WAPA news, earlier this week the utility said it successfully conducted tests on the W?rtsil? engines in a St. Thomas power station. The integration of the engines has been delayed by two years but their impending adoption should allow the plant to run on propane, which is substantially cheaper than the oil it is currently burning.

The authority hopes to start using the engines on a full-time basis in December or January and now uses them during extended daytime hours.

As of May 31, the authority's electric system had liabilities, including those payable from restricted assets, of $562.2 million. It had $178.6 million in electric system revenue bonds due in more than 12 months plus about $20 million in bond principal and interest payable in the following 12 months and $1.157 billion in total liabilities.

Moody's Ratings withdrew its Caa2 rating of WAPA and Fitch Ratings withdrew its CC rating in 2023, both citing a lack of up-to-date audited financial information. The May 31 data is unaudited. Moody's and Fitch declined to comment for this story.