USVI’s Governor Arrives in Washington for a Handout

After spending trillions of tax dollars in just two years, is there any ink left in President Biden’s check-signing pen? That’s the question U.S. Virgin Island’s Governor Albert Bryan will be asking this week as he pleads for help from the Biden administration.

Governor Bryan’s visit to Washington is spurred by a crisis unfolding on his watch: The government-run Water and Power Authority (WAPA) is about to run out of gas – literally.

WAPA has chosen not pay its largest vendor, Texas-based energy company Vitol, for building state-of-the-art Liquefied Propane Gas (LPG) terminals to power the U.S. Territory.

WAPA claims it can’t pay, but in reality, it simply won’t pay. Now, the potential for blackouts to hit the islands is growing. WAPA is desperately attempting to pass blame onto Vitol, and we suspect Governor Bryan will do the same this week in Washington, but the real fault lies at the feet of WAPA and Governor Bryan.

WAPA thinks it can have a free lunch; get the benefits, get a new handout from Washington, while not paying its debts. Hopefully, Governor Bryan gets a clear message: there will be no free handout without paying your debts and serious reforms.

USVI Has Gotten Billions from the Feds. Where Did it All Go?

The federal government has funneled over $1 billion directly to WAPA since 2017, and another $7 billion to the USVI government since 2017 under the umbrella of disaster relief following Hurricanes Maria and Irma.

That’s a lot of money, and the deluge of funds isn’t limited to natural disasters. Since 2020, the feds have handed over $75 million (CARES Act), $257 million (Coronavirus Education Stabilization Fund), and $515 million (ARP Act).

Where did it all go?

We know that $75 million of it from HUD has been wasted on four Wartsila generators that don’t work with Vitol’s LPG terminals – a costly error due to WAPA’s lack of due diligence. These four units are a year delayed with no realistic plan for them to burn LPG anytime soon – no matter what WAPA or Virgin Islands Congressional Delegate Plaskett tell you.

Acute readers will also recall comments made by Delegate Plaskett highlighting WAPA’s inability to use federal funds effectively. She’s called for a state of emergency and notes that HUD has raised concerns with WAPA’s capacity to handle hundreds of millions of dollars in federal aid.

Delegate Plaskett is right, and unfortunately the management of WAPA has only deteriorated since her 2019 letter.

Congressional Scrutiny Grows

Recently, Congressman Lamborn (R-CO) said what everyone in Washington thinks: USVI and other territories only come to DC to ask for money despite not meeting their financial obligations. Lamborn noted “it’s time for the territories to pay their debts.”

Others have also sounded the alarm. Reps. McCaul (R-TX) and Webster (R-FL) have each highlighted WAPA’s refusal to repay Vitol for its $150 million investment into the LPG facilities.

Four members on the House Oversight Committee, led by Congressman Byron Donalds (R-FL), want HUD to open an inquiry into why the units aren’t working. They note “there appears to have been a woeful lack of preparation on the part of WAPA, in addition to a lack of oversight by the Department of Housing and Urban Development (HUD) pertaining to the acquisition of these four generators.” It’s only a matter of time until government watchdogs get to the bottom of what is going on in the USVI.

Will USVI and WAPA Violate Federal Court-Ordered Consent Decree?

The Vitol terminals have not only provided WAPA the opportunity to lower fuel costs, but also help the Authority stay in compliance with federal law. In short, choosing not to pay Vitol will force WAPA to switch to diesel. This will lead to a situation where WAPA is likely to be in violation of their Clean Air Act Consent Decree.

In case there is doubt, here is an excerpt from the 2018 amended consent decree agreement:

“The Consent Decree, entered by the Court on September 30, 2016, requires VIWAPA to generate a high percentage of its KWh from liquid propane gas or liquid natural gas and renewables, to implement a spare parts inventory program, to control NO_X emissions through improved operation of its water injection system… and to conduct targeted self-audits and third party audits given its long term compliance problems.”

Washington and residents of the USVI can expect WAPA to claim that this situation is short term, citing their aggressive transition to solar funded by FEMA, but that’s just not credible. There’s nothing to suggest that a transition to solar is likely anytime soon.

Looking Ahead

Governor Bryan will undoubtedly seek some level of funding commitment from either the Biden administration, Congress, or both. TPA has exposed the USVI’s propensity to waste what the federal government provides, therefore, it is essential that any short-term funding stream– whether it be aid, loans, or general financial support – be accompanied with strict guidelines or milestones to keep the territory honest. Taxpayers have already wasted enough money down in the Caribbean, and without clear performance targets, it’s likely the territory will continue its inefficient ways.