USVI’s Power Authority on the Hot Seat: Burning Questions for its Chief Executive, Mr. Smith

Agencies and instrumentalities of governments are too often recognized for their lack of transparency and accountability to taxpayers. 

Thankfully, our organization, the Taxpayers Protection Alliance, is dedicated to shining a light on rogue government agencies across the country, including those in far-flung places like the U.S. Virgin Islands.

Over the last five years, the USVI and its poorly-run public power utility, the Water and Power Authority (WAPA) have become a case in point for mismanagement, having fumbled millions of dollars to assist them through disaster recovery, Covid-19 relief, infrastructure spending, and general appropriations. Where did all of this generous funding from taxpayers go?

That’s a pressing question that Congress needs to ask, which is why in June, TPA sent a letter to congressional leaders outlining our concerns over the lack of oversight of federal dollars flowing into the territory’s power utility. It’s such a concerning situation that we declared that before additional taxpayer dollars are given out to the USVI, “WAPA must meet the bare minimum of its financial obligations and drastically reform its project management practices.”

It’s clear from WAPA’s terrible track record of cash management, that any further funding would just result in these dollars being wasted too.

WAPA’s inability to spend tax dollars effectively is evidence that the agency is the epitome of mismanagement: it has burned through more than a billion federal tax dollars, is choosing not to repay creditors, and is demanding the federal government foot the bill for transition to 100 percent solar energy. It’s a collection of gross negligence that puts it on par with the perennially troubled United States Postal Service.

The puzzling financial situation has even attracted scrutiny from economists like Ike Brannon, who recently noted “despite the massive infusion of taxpayer assistance, WAPA is drowning in debt and plagued by mismanagement.”

At the same time, during his short tenure as WAPA’s CEO, Andy Smith, has refused to offer the public even the most basic level of transparency. He has failed to provide sufficient updates on why the utility misused employee pension contributions, the extent of Ernst & Young’s expensive contract with WAPA, why blackouts continue to plague the grid, and more.

Mr. Smith was supposedly hired to keep the lights on, but he’s done a better job of keeping residents in the dark, both literally and figuratively. Yet, on Monday, August 1, Mr. Smith will participate in a “Big Interview” with local press to discuss what exactly is going on with his broken power utility. The chief executive will be on the hot seat taking questions. Here’s a few that need answering:

1.  More than two years ago, the U.S. Department of Housing and Urban Development (HUD) through the Community Development Block Grant program forked over, $75 million (at least) of taxpayer money to WAPA to purchase 4 Wartsila power generators. These generators, some of which have been on the islands for months, are not yet connected to the Vitol-run LPG system. WAPA’s Corporate Communications Director Nyomi Gumbs says they’re working “diligently”  to get the generators online, but why is the process taking so long? Did WAPA buy the wrong generators? Do the generators work with the Vitol system? Is HUD aware of the operability challenges with the generators WAPA purchased?
2.  The financial documents presented show the single largest outstanding financial obligation is to a Houston-based energy company, Vitol. In the most recent budget there is no money allocated to repay the company for the construction of state-of-the-art Liquid Propane Gas (LPG) facilities. Why isn’t the agency making any payments, and what is the plan to get the debt off the books?
3.  Mr. Smith stated WAPA has had ongoing discussions with solar developers looking to develop USVI’s solar capabilities. At the same time Gov. Bryan has been asking President Biden to foot the bill for such a renewable energy gambit. What is the urgency to move completely to solar energy and does WAPA have a plan for baseload power? Why would WAPA need solar if it has the LPG facility?
4.  In June, news broke that because WAPA wasn’t paying its bills for the use of power generator, WAPA had to rely on a faulty back-up unit that ended up causing a major power outage. In response to the USVI Governor having to give WAPA millions of dollars to purchase a working generator (TPA blogged about the “Curious Circumstances Surrounding GE Unit 27”). Why did the USVI Governor need to rescue WAPA? Are there other generators that WAPA is not making timely payments on? Is there a scenario where other generators are pulled from service due to a lack of payment?

American taxpayers are asking questions. Residents of the USVI are no doubt tired of blackouts. We’ll be tuning in to see what Mr. Smith has to say Monday. With many burning questions that deserve detailed and thorough answers, let’s hope WAPA’s CEO comes prepared.