U.S. Virgin Islands Water and Power Authority · $0 $200 $400 $600 $800 $1,000 $1,200 $1,400. Total...

U.S. Virgin Islands Water and Power AuthorityUpdate

December 11, 2018

W-000001

Information contained herein has not been independently verified and is subject to material change based on continuing review. Accordingly, the information contained herein is not intended to be and should not be relied upon by any third party or as legal, auditing, or accounting advice.

The attached analyses and preliminary cash flow tool and their accompanying analyses, assumptions and underlying data are the product of U.S. Virgin Islands Water and Power Authority ("WAPA") and its management (“Management”) and consist of information obtained solely from WAPA. With respect to prospective financial information relative to WAPA, there has not been any examination, compilation or application of agreed upon procedures to such information in accordance with attestation standards established by the AICPA. Consequently, no assurance of any kind is given with respect to, or on, the information presented. It is WAPA’s responsibility to make its own decision based on the information available to it. Management has the knowledge, experience and ability to form its own conclusions related to WAPA's cash flow forecast and other analyses. There will usually be differences between forecasted and actual results because events and circumstances frequently do not occur as expected and those differences may be material. As a result, no responsibility for the achievement of forecasted results is made. Accordingly, reliance on this report is prohibited by any third party as the projected financial information contained herein is subject to material change and may not reflect actual results.

Many of numbers set forth herein are estimates or based on assumptions which are subject to change. Such changes may be material and can materially affect the calculation of other amounts reflected herein.

U.S. Virgin Islands Water and Power AuthorityPreliminary Draft – Work in Process / Subject to Material Change

2

W-000002

Situation Overview

DRAFT - Subject to Material Change 3

Current Financial Status• WAPA’s liquidity is severely constrained, putting unsustainable pressures on daily operations and

delivery of water and electricity to its customers• It is running weekly deficits in excess of its $15m bank overdraft account• It is deferring all non-critical expenses and its fuel deliveries are COD• It has no cash reserves to deal with emergency repairs or outages• Without an increase in electric sales or rates, WAPA projects a FY 2019 operating deficit of at least

$35m

Structural Challenges • Due to hurricane outages, FY2018 electric sales were 37% below FY 2017• FY2019 electric sales are projected to remain 13% below pre-storm levels• Currently-approved base rates are below new generator rental costs• LEACs have consistently produced lower electric revenues than forecast• WAPA’s residential electric rates of $0.38/kWh are already among the highest in the Caribbean and

50% more than Puerto Rico• WAPA has an unsustainable level of debt and no longer has access to the capital markets

W-000003

Situation Overview


Payables• WAPA owes its current fuel suppliers approximately $42m (Vitol $27m & Glencore $15m). • Both suppliers require payment before delivery and have threatened to cut WAPA off for non-

payment.• In addition, WAPA is unable to pay its $30m annual infrastructure lease payment to Vitol – this

delinquency is currently at $58m and growing• In addition, WAPA owes other venders over $110m and its pension and OPEB liability to GERS is

$396mCapital Needs• WAPA requires at least $300-400m of immediate capital funding to modernize and upgrade its aging,

costly and dirty generation facilities• In addition to suspending its Vitol lease payments, WAPA does not have sufficient funds to pay for

and take delivery of its committed Aggreko and Wartsila new generators• WAPA does not have sufficient reserves or operating cash flow to make urgently required capital

repairs to some of its existing facilities • WAPA does not have capital market access and higher electric rates would be required even if it

could borrow funds to complete these projects• USVI should lobby HUD for a greater share of the $2B Congress allocated for electric projects in

Puerto Rico and Virgin Islands (USVI received only 3%)• However, both FEMA and CDBG-DR programs restrict funding to replacement of damaged assets or

newly procured projects limiting their utility for WAPA’s immediate needs

W-000004

Situation Overview


Fiscal Recovery Plan• The Authority has begun development of a multi-year Fiscal Recovery Plan to guide its return to fiscal

solvency and provider of safe, reliable, clean and affordable electricity to the US Virgin Islands. • In the meantime, WAPA is moving immediately to put in place a near-term emergency liquidity plan

of revenue enhancements and spending cuts to assure continued operations• This liquidity plan includes resumption of its customer “disconnect policy” for non-payment and a

request for temporary rate surcharges from the PSC

W-000005

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Total Federal Funding

$ m

illio

ns

Obligated FEMA Funds

CDBG-DR

$1,055

$202

WAPA Federal Disaster Funding


• Disaster funding is only available for replacement of damaged facilities or newly procured capital projects

• Any pre-hurricane in-process projects are typically not eligible

• Requirements for the utilization of funds are strict and typically non-negotiable

• The total amount of and identification of specific projects has not yet been finalized and is subject to change

Federal Funding To Date Key Considerations

Total $1.26B

Note: Of the $202m of CDBG-DR funding, $67 million is the portion allocated exclusively for utility purposes to both USVI and Puerto RicoSource: FEMA, Federal Register/Vol. 83, No. 157 & VIHFA CDBG-DR Action Plan & Revised Action Plan

W-000006

WAPA’s Current Liabilities


WAPA Liabilities Details ConsiderationsWAPA Bonds$252m

• Includes both senior and subordinated revenue bonds and BANs

• Inclusive of $13m RUS Loan

• WAPA has no market access or additional debt capacity

CDL$94m

• Total CDL balance of $94.5m based on revenue loss calculations provided to FEMA/US Treasury

• No further CDL funding is expected, as the one year post-storm period has passed

• Proceeds used to fund fuel purchases

• Loan secured by lien on Electric and Water revenues with repayment beginning 2022

Vitol Capital$160m

• Represents principal portion of infrastructure project

• Annual lease payments are $30m annually over 10 years

• Facility is completed and in operation

• WAPA is not making lease payments and owes $53m and growing

Wartsila /Aggreko

$70m

• Represents remaining $19m payment on first three Wartsila units and projected total cost of Aggreko lease with a 48-month term

• These projects are committed and in-process of delivery, but a funding source remains unidentified

Fuel Vendors$78m

• Includes balances due to Vitol (Fuel/O&M), Glencore, and Trafigura

• WAPA has no trade credit and has to pay for fuel with “cash in advance”

Non-Fuel Vendors

$83m

• Includes all other A/P balances that are not anticipated to be reimbursed by FEMA

• Pre-hurricane accounts payable have increased by 70% from $99m to $171m

•

Credit Lines$33m

• Unsecured lines of credit with Banco Popularand First Bank

• Currently negotiating to extend maturity beyond 2018

•

Pension & OPEB

$396m

• Represents balance sheet liability (both Electric and Water system) for pension and OPEB

• WAPA has only been making current pension payments

Total $1.16B

WAPA’s total liabilities exceed $1B which are not expected to be eligible for federal disaster recovery funding

Source: WAPA A/P aging, contracts, debt schedules

$0

$200

$400

$600

$800

$1,000

$1,200

Liabiltiies

Bala

nce

(in m

illio

ns)

CDL

Pension | OPEB

Non-Fuel Vendors

Fuel Vendors

Wartsila | Aggreko

Vitol Capital Lease

WAPA Bonds21.7%

8.1%

13.8%

6.0%

6.7%

34.1%

7.1%2.3%

Credit Lines

W-000007

WAPA Debt Per Capita and Electricity Rates


• WAPA’s non-retirement indebtedness has increased by 90% since 2016• Including its retirement benefit liabilities, WAPA’s total debt exceeds $18k per

customer• WAPA’s ability to raise rates further may be limited, as residential rates are already

at the high end of the comparable rates for other Caribbean islands

Source: Castalia Strategic Advisors, Energy in the Caribbean, Challenges and Opportunities, 2017Note: USVI Rate of $0.36 represents rate charge for monthly usage

Historical Relationship Between LEAC and WAPA Fuel Cost


• Because WAPA had over-collected on the LEAC by approximately $24m at the end of FY2015, the LEAC was reduced from 40¢ to 19¢

• Since that reduction, the LEAC has not kept pace with the change in fuel prices and WAPA has consistently under-billed customers for its fuel costs

Deferred Fuel HistoryHistorical Fuel Pricing vs. LEAC

($80)

($60)

($40)

($20)

$0

$20

$40

BeginningBalance(2014)

2015 2016 2017 2018 2019 YTD CurrentBalance

$ m

illio

ns $(5.6)

$24.4

$(28.5)

$(10.1)

$(36.4)

$(15.4)

$(71.7)

Fuel Over-billed

Fuel Under-billed

Fiscal Year

$90m

Over the past 3+ years, WAPA has paid fuel vendors over $90m more than it collected from ratepayers for fuel expenses

Source: WAPA trial balance historySource: US Energy Information Administration, US No. 2 Fuel Oil Wholesale/Resale Price History, Mont Belvieu, TX Propane Monthly Spot Price History, WAPA rate history

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Jul-1

4

Oct

-14

Jan-

15

Apr-

15

Jul-1

5

Oct

-15

Jan-

16

Apr-

16

Jul-1

6

Oct

-16

Jan-

17

Apr-

17

Jul-1

7

Oct

-17

Jan-

18

Apr-

18

Jul-1

8

#2 Oil % Change LPG % Change LEAC % Change

W-000009

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jul-1

6Au

g-16

Sep-

16O

ct-1

6N

ov-1

6De

c-16

Jan-

17Fe

b-17

Mar

-17

Apr-

17M

ay-1

7Ju

n-17

Jul-1

7Au

g-17

Sep-

17O

ct-1

7N

ov-1

7De

c-17

Jan-

18Fe

b-18

Mar

-18

Apr-

18M

ay-1

8Ju

n-18

Jul-1

8Au

g-18

Sep-

18O

ct-1

8

MW

h

MWh Generation Pre-Storm Average

WAPA – Historical Electric Generation


Recent Electric Generation (MWh)

• While gross electricity generation has mostly recovered from the impacts of Hurricanes Maria and Irma, production in FY 2019 has averaged 14% under pre-storm average for comparable months

As service has been fully restored since February 2018, there is a possibility this 14% reduction is a ‘permanent’ reduction in electricity demand

Pre-storm Recovery PeriodService Fully

Restored

14% BelowPre-Storm

Levels

$1.1B FEMA Disaster Recovery Obligated /

Spent

W-000010

Cash – Short Term Outlook


Short-Term Cash Flow Summary(13 weeks ending 2/22/2019) Operating Cash Balance (Actual & Forecast)

• Cash flow summary does not include FEMA-funded project payments and receipts• Current projections for cash receipts appear insufficient to cover essential expenses (payroll,

fuel costs, debt service) over the next 13 weeks• Current projections do not account for fuel and other A/Ps, Vitol lease payments, committed

but unfunded CapEx projects, or reserves for emergencies

*Notes:

• Other Receipts includes $14m in CDL proceeds• Cash actuals since July 1, 2018 are based on management analysis

$(25.0)

$(20.0)

$(15.0)

$(10.0)

$(5.0)

$-

$5.0

$10.0

$ in

mill

ions

Week Ending

Operating Cash Balance - Actual Operating Cash Balance - Forecast Minimium Cash Balance

Actuals Forecast Total$ in millions 7/1/18-11/23/18 11/30/18-2/22/19

ReceiptsCustomer Collections 88.6$ 54.1$ 142.8$ Hedging Receipts 8.7 3.0 11.7 Other 22.6 0.7 23.3

Total Receipts 119.9$ 57.8$ 177.8$

Operating ExpendituresPayroll & Benefits (14.2)$ (11.6)$ (25.8)$ Debt Service (11.3) (10.8) (22.1) Fuel and O&M (66.0) (44.5) (110.5) Purchased Water & Power (2.3) (2.6) (4.9) Equipment Lease (3.9) - (3.9) Other (16.2) (10.9) (27.1)

Total Operating Expenditures (113.9)$ (80.4)$ (194.4)$

Total Operating Cash Flow 6.0$ (22.6)$ (16.6)$

W-000011

13-Week Cash Flow


*Notes:1. Includes payments from JFL for past due amounts and transfers to Revenue Reserve Account2. Assumes no payments are made to FEMA vendors without WAPA first receiving the funds from FEMA3. Includes all operating bank accounts, with the exception of x9000 (Bank of St. Croix)4. Includes all restricted bank accounts

$000s nForecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast 13 Week Percent

Operating Cash Flows Notes 11/30/18 12/7/18 12/14/18 12/21/18 12/28/18 1/4/19 1/11/19 1/18/19 1/25/19 2/1/19 2/8/19 2/15/19 2/22/19 Total of TotalReceipts

Customer Collections 3,836$ 3,828$ 3,296$ 3,738$ 7,811$ 4,747$ 3,352$ 2,193$ 2,298$ 7,491$ 4,231$ 3,815$ 3,491$ 54,127$ 93.6%Hedging Receipts - 1,000 - - - - 1,000 - - - 1,000 - - 3,000 5.2%Other (1) (1,183) - - - 1,885 - - - - - - - - 702 1.2%

Total Receipts 2,653$ 4,828$ 3,296$ 3,738$ 9,696$ 4,747$ 4,352$ 2,193$ 2,298$ 7,491$ 5,231$ 3,815$ 3,491$ 57,828$ 100.0%

Operating ExpendituresPayroll & Benefits (1,448)$ (553)$ (1,210)$ (595)$ (895)$ (595)$ (1,365)$ (595)$ (895)$ (595)$ (1,365)$ (595)$ (895)$ (11,602)$ 14.4%Debt Service - - (2,104) (4,500) - - - (2,104) - - - (2,104) - (10,812) 13.4%Fuel and O&M (6,700) (785) (2,800) (5,050) (2,800) (5,835) (2,800) (1,250) (3,800) (4,835) - (7,850) - (44,505) 55.3%Purchased Water & Power - (865) - - - (865) - - - (835) (30) - - (2,595) 3.2%Equipment Lease - - - - - - - - - - - - - - 0.0%Other (1,926) (500) (1,268) (551) (855) (1,109) (560) (647) (540) (1,149) (606) (651) (542) (10,905) 13.6%

Total Operating Expenditures (10,075)$ (2,703)$ (7,382)$ (10,696)$ (4,550)$ (8,404)$ (4,725)$ (4,596)$ (5,235)$ (7,414)$ (2,001)$ (11,200)$ (1,437)$ (80,418)$ 100.0%

Total Operating Cash Flow (7,421)$ 2,125$ (4,086)$ (6,958)$ 5,146$ (3,657)$ (374)$ (2,403)$ (2,937)$ 77$ 3,229$ (7,385)$ 2,055$ (22,590)$

FEMA & Other Grant Cash FlowsFEMA & Other Grant Receipts (2) -$ -$ -$ -$ 44$ -$ -$ -$ -$ -$ -$ -$ -$ 44$ FEMA & Other Grant Disbursements (2) (145) - - - - - - - - - - - - (145)

Total FEMA & Other Grant Cash Flows (145)$ -$ -$ -$ 44$ -$ -$ -$ -$ -$ -$ -$ -$ (101)$

Net Operating Cash Flows (7,566)$ 2,125$ (4,086)$ (6,958)$ 5,190$ (3,657)$ (374)$ (2,403)$ (2,937)$ 77$ 3,229$ (7,385)$ 2,055$ (22,691)$

Beginning Operating Cash Balance (3) 3,075$ (4,491)$ (2,367)$ (6,453)$ (13,411)$ (8,221)$ (11,878)$ (12,251)$ (14,654)$ (17,591)$ (17,514)$ (14,285)$ (21,670)$ 3,075$ Net Operating Cash Flows (7,566) 2,125 (4,086) (6,958) 5,190 (3,657) (374) (2,403) (2,937) 77 3,229 (7,385) 2,055 (22,691)

Ending Operating Cash Balance (3) (4,491)$ (2,367)$ (6,453)$ (13,411)$ (8,221)$ (11,878)$ (12,251)$ (14,654)$ (17,591)$ (17,514)$ (14,285)$ (21,670)$ (19,616)$ (19,616)$

Ending Restricted Cash Balance (4) 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$ 2,501$

Consolidated Cash Balance (1,990)$ 134$ (3,952)$ (10,910)$ (5,720)$ (9,377)$ (9,751)$ (12,154)$ (15,090)$ (15,014)$ (11,784)$ (19,170)$ (17,115)$ (17,115)$

W-000012

Next Steps


• Develop near-term liquidity plan to maintain WAPA’s operations through June 30, 2019

• Identify surcharge rate increases required to provide near-term liquidity relief for WAPA

• Determine ‘highest and best use’ of federal disaster funds, with a focus on improving resiliency and lowering future costs for WAPA ratepayers

• Complete long term fiscal recovery plan to identify revenue and expense measures to close the projected fiscal gaps

• Quantify permanent base rate needs and potential for future rate relief as a result of improvement projects

W-000013

Appendix


W-000014

Long Term Plan – Workplan Detail


WAPA FISCAL PLAN TIMELINE Plan Elements

Lead Advisors WAPA LEADS* COMPLETION

DATES 1. Meet with PSC Staff to review current state

of Play and Fiscal Plan Timeline December 2018

2. Prepare/Submit Surcharge Rate Petitions to

PSC • PRMG

• JF • LF

December 2018

3. Near-Term Liquidity Plan (FY19 H2) • EY

• LK

December 2018

(a) Resolve generation / sales reporting gap / reconcile YTD revenue

• EY • WOB

• CH • DG

(b) Develop defensible revenue forecast based on current generation and anticipated demand/sales

• EY • WOB

• DG • CH

(c) Develop series of immediate revenue enhancement and cost reduction actionable initiatives

• EY • WOB

• CH • DG

(d) Address immediate capital needs: • Determine most effective funding

source for Aggreko • Determine most effective funding

source for Wartsila • Undertake cost/benefit analysis and

identify funding source for emergency capital repairs

• Sustainable Capital

• WOB

• CH • GR

(e) Develop Weekly Cash Flow Tool for FY19 H2

• EY • PRMG

• DG • CH

4. Present and Review Near-term Liquidity Plan with PSC

January 2019

5. 5-Year Baseline Fiscal Plan (existing laws/policies/business model/staffing/rates)

• EY

• LK

January 2019

(a) Historical context • PRMG • Leidos

• GR • LF

(b) Revenue/Expense Forecast • EY • PRMG

• DG • CH

(c) CapEx (based on existing commitments only)

• EY • WOB

• CH • GR

(d) Inventory short/long term liabilities • EY • Sustainable

Capital

• DG • LF

(e) Quantify annual fiscal gaps • EY • DG

W-000015

Plan Elements

Lead Advisors

WAPA LEADS*

COMPLETION DATES

1.

Meet with PSC Staff to review current state of Play and Fiscal Plan Timeline

December 2018

2.

Prepare/Submit Surcharge Rate Petitions to PSC

· PRMG

· JF

· LF

December 2018

3.

Near-Term Liquidity Plan (FY19 H2)

· EY

· LK

December 2018

(a)

Resolve generation / sales reporting gap / reconcile YTD revenue

· EY

· WOB

· CH

· DG

(b)

Develop defensible revenue forecast based on current generation and anticipated demand/sales

· EY

· WOB

· DG

· CH

(c)

Develop series of immediate revenue enhancement and cost reduction actionable initiatives

· EY

· WOB

· CH

· DG

(d)

Address immediate capital needs:

· Determine most effective funding source for Aggreko

· Determine most effective funding source for Wartsila

· Undertake cost/benefit analysis and identify funding source for emergency capital repairs

· Sustainable Capital

· WOB

· CH

· GR

(e)

Develop Weekly Cash Flow Tool for FY19 H2

· EY

· PRMG

· DG

· CH

4.

Present and Review Near-term Liquidity Plan with PSC

January 2019

5.

5-Year Baseline Fiscal Plan

(existing laws/policies/business model/staffing/rates)

· EY

· LK

January 2019

(a)

Historical context

· PRMG

· Leidos

· GR

· LF

(b)

Revenue/Expense Forecast

· EY

· PRMG

· DG

· CH

(c)

CapEx (based on existing commitments only)

· EY

· WOB

· CH

· GR

(d)

Inventory short/long term liabilities

· EY

· Sustainable Capital

· DG

· LF

(e)

Quantify annual fiscal gaps

· EY

· DG

Plan Elements

Lead Advisors WAPA LEADS COMPLETION DATES

6. Present and Review 5-Year Baseline Fiscal Plan with PSC

February 2019

7. Develop Preliminary 5-Year Fiscal Recovery Plan

• EY

• LK

March 2019

(a) Develop, vet, and quantify measures to close the Baseline Fiscal Plan Gaps

• EY • WOB

• CH • DG

(b) Preliminary rate study that factors in competitive landscape and economic analysis

• PRMG • EY QUEST

• JF

(c) Updated IRP • Black & Veatch

• CH • GR

(d) EPA Consent Decree compliance plan • WOB • Leidos

• LF • GR

(e) Capital plan that integrates all Federal recovery and additional capital resources to implement IRP

• EY • WOB

• CH • GR

(f) Operational and fiscal governance reform plan that incorporates recommended measures

• EY • WOB

• DG • CH

(g) Financing plan of capital plan (e) • EY • Sustainable

Partners

• DG • LF

8. Present and Review Preliminary 5-Year Fiscal Recovery Plan with PSC

March 2019

9. Revise and Adopt Final 5-Year Fiscal Recovery Plan

• EY

• LK

April 2019

10. Final Rate Study Based on Long Term Fiscal Recovery Plan That Supports PSC Base Rate Petition

• PRMG • Leidos

• JF • LF

April 2019

11. Submit PSC Base Rate Petition April 2019

*WAPA LEAD KEY:

- Lorelei Farrington (LF) - Joan Foy (JF) - Debra Gottlieb (DG) - Clinton Hedrington (CH) - Shawn Hill (SH) - Lawrence Kupfer (LK) - Greg Rhymer (GR)

Long Term Plan – Workplan Detail


WAPA FISCAL PLAN TIMELINE

W-000016

Plan Elements

Lead Advisors

WAPA LEADS

COMPLETION DATES

6.

Present and Review 5-Year Baseline Fiscal Plan with PSC

February 2019

7.

Develop Preliminary 5-Year Fiscal Recovery Plan

· EY

· LK

March 2019

(a)

Develop, vet, and quantify measures to close the Baseline Fiscal Plan Gaps

· EY

· WOB

· CH

· DG

(b)

Preliminary rate study that factors in competitive landscape and economic analysis

· PRMG

· EY QUEST

· JF

(c)

Updated IRP

· Black & Veatch

· CH

· GR

(d)

EPA Consent Decree compliance plan

· WOB

· Leidos

· LF

· GR

(e)

Capital plan that integrates all Federal recovery and additional capital resources to implement IRP

· EY

· WOB

· CH

· GR

(f)

Operational and fiscal governance reform plan that incorporates recommended measures

· EY

· WOB

· DG

· CH

(g)

Financing plan of capital plan (e)

· EY

· Sustainable Partners

· DG

· LF

8.

Present and Review Preliminary 5-Year Fiscal Recovery Plan with PSC

March 2019

9.

Revise and Adopt Final 5-Year Fiscal Recovery Plan

· EY

· LK

April 2019

10.

Final Rate Study Based on Long Term Fiscal Recovery Plan That Supports PSC Base Rate Petition

· PRMG

· Leidos

· JF

· LF

April 2019

11.

Submit PSC Base Rate Petition

April 2019

*WAPA LEAD KEY:

· Lorelei Farrington (LF)

· Joan Foy (JF)

· Debra Gottlieb (DG)

· Clinton Hedrington (CH)

· Shawn Hill (SH)

· Lawrence Kupfer (LK)

· Greg Rhymer (GR)

1

W-000017

W-000018

Virgin Islands Water and Power Authority

Vitol / Electric Rates Update

July 12, 2019

W-000019

1Virgin Islands Water and Power Authority 7/12/2019

Table of Contents

1 Vitol Default Notice

2 Rate Actions Required by PSC

W-000020


Table of Contents



W-000021


● Currently, Propane is 44% cheaper than No. 2 Oil.– Vitol is Aware of this and is Applying Maximum Pressure to be Paid Amounts Owed:

Approximately $100 Million is Owed. Demanding that WAPA Stays Current on All Payments. Demanding $20 Million Lump Sum Payment by July 23rd. Demanding $1.5 Million Additional Per Month Starting in August.

– Vitol has Issued Notice of Default and Threatened to Discontinue Propane Supply on July 23rd if Above Demands are not Agreed to. Residential Rates Would Increase by 6 Cents/KWHr with Propane Supply Disruption. Glencore (No. 2 Oil Supplier) Already at Maximum Credit and Additional Volumes Would Further Stress

Credit Situation. Glencore’s Contract Expires 12/31/2019 – Renewal Requires Mutual Agreement.● Propose Using $22.9 Million Medicaid Reimbursement as Follows:

– $20 Million for Lump Sum Payment Due by July 23rd.– $2.6 Million for July Infrastructure Payment.– Defer $10.4 Million of Funds Previous Advanced by Finance to Pay March – June Infrastructure.

Advance Covered by Future Medicaid Reimbursement.● Propose Obtaining Rates to Partially Cover $1.5 Million Additional Per Month Starting in August. Balance Covered by

Medicaid Reimbursement for 3 Months.– 1 Cent/KWHr = $0.4 Million Per Month– $1.1 Million Per Month for 3 Months = $3.3 Million Medicaid Reimbursement.

Substantially Progress Vitol Buy-Out Negotiations for 3 Months and Request to Discontinue Additional Payments. Rates Needed to Progress Vitol Buy-Out Negotiations (Agenda Item No. 2).

● $14.4 Million Additional Medicaid Reimbursement Required. GVI Entities Still Owe WAPA Approximately $8 Million.

Vitol Default Notice W-000022


Table of Contents



W-000023


● Base Rate Petition Has Been Re-Analyzed to Lessen Rate Impact.

Rate Actions Required by PSC

C/KWHr

Base Rate Request (CAPEX Deferred) 7.67 Renegotiated APR Lease (0.93) Align STX 2nd Phase with LEAC (0.71) Other Miscalleanous Adj. (0.07) 2003A Refunding (AMBAC) (0.38) Re-Finance First 3 Wartsila (0.22) Senior Debt Adj. (0.68) Vitol $1.5MM ($0.4MM) 1.00

Revised Base Rate Request 5.68

Leased Generator Surcharge (3.08)

Net Base Rate Impact 2.60

● LEAC Resubmitted With Lower Prices and Revised Aggreko Dispatch. Current Fuel Portion - (2.57) C/KWHr Deferred Fuel - 3.81 C/KWHr

– With Medicaid Reimbursements, Deferred Fuel Charge can be Waived.

● Resulting Net Rate Impact is Only 0.03 C/KWHr. Note: LEAC Rates Subject to Fuel Price Variability.

W-000024



Residential Electric Rates

TargetLine June 30, July 31, August 31, Dec. 31, Dec. 31,No. 2019 2019 2019 2019 2020

(A) (B) (C) (D) (E)Residential Rate

1 LEAC 19.26 19.26 16.69 16.69 11.38 2 BASE 20.60 23.68 26.28 24.49 22.50 3 Total 39.86 42.94 42.97 41.18 33.88

Adj.4 LEAC - (2.57) - (5.31) (2)5 BASE 3.08 2.60 (1.79) (1) (1.99) (3)6 Total Adj. 3.08 0.03 (1.79) (7.30)

(1) Vitol Buyout(2) HUD Projects (STT Generation / Renewables)(3) Cancel APR Lease

Description

Cents/KWhr

W-000025



● PSC Hearing Schedule for July 31, 2019.● PSC Needs to Take Following Action at the Meeting:

1. Approve LEAC Decrease of 2.57 C/KWHr.2. Deny Deferred Fuel Charge of 3.81 C/KWHr.

Will Continue to Seek Medicaid Reimbursements.3. Approve Permanent Base Rate Increase of Approximately 5.68 C/KWHr

Meet with PSC Consultants Next Week to Finalize Increase. Allows Previously Identified Serious Investors to Consider Vitol Buy-Out.

4. Order That Leased Generator Surcharge be Removed When 3. Goes Into Effect.5. Order That the LEAC Decrease and New Base Rates Begin Billing at the Same Time e.g. 30 Days After Notice of

Rates Issued. ● The Above Actions were Reviewed with PSC Commissioner Raymond Williams on Wednesday, July 10.

This Would Maintain Residential Rates at Approximately 43 Cents/KWHrVs.

Approximately 49 Cents/KWHr if Vitol Cuts Off Propane Supply

W-000026

Virgin Islands Water and Power Authority

Vitol / Electric Rates Update

July 22, 2019

W-000027


Table of Contents



W-000028


Table of Contents



W-000029


● Currently, Propane is 44% cheaper than No. 2 Oil.– Vitol is Aware of this and is Applying Maximum Pressure to be Paid Amounts Owed:

Approximately $100 Million is Owed. Demanding that WAPA Stays Current on All Payments. Demanding $20 Million Lump Sum Payment by July 23rd. Demanding $1.5 Million Additional Per Month Starting in August.

– Vitol has Issued Notice of Default and Threatened to Discontinue Propane Supply on July 23rd if Above Demands are not Agreed to. Residential Rates Would Increase by 6 Cents/KWHr with Propane Supply Disruption. Glencore (No. 2 Oil Supplier) Already at Maximum Credit and Additional Volumes Would Further Stress

Credit Situation. Glencore’s Contract Expires 12/31/2019 – Renewal Requires Mutual Agreement.● Propose Using $22.9 Medicaid Reimbursement as Follows:

– $20 Million for Lump Sum Payment Due by July 23rd.– $2.9 Million to be Applied Against $10.4 Million of Funds Previous Advanced by Finance to Pay March – June

Infrastructure. Remaining Advance Covered by GVI Recievables.

● Propose Obtaining Rates to Partially Cover $1.5 Million Additional Per Month Starting in August. – 1 Cent/KWHr = $0.4 Million Per Month– $1.1 Million Per Month for 3 Months = $3.3 - Will Continue to Work with GVI.

Substantially Progress Vitol Buy-Out Negotiations for 3 Months and Request to Discontinue Additional Payments. Rates Needed to Progress Vitol Buy-Out Negotiations (Agenda Item No. 2).

Vitol Default Notice W-000030


Table of Contents



W-000031


● Base Rate Petition Has Been Re-Analyzed to Lessen Rate Impact.


C/KWHr

Base Rate Request (CAPEX Deferred) 7.67 Renegotiated APR Lease (0.93) Align STX 2nd Phase with LEAC (0.71) Other Miscalleanous Adj. (0.07) 2003A Refunding (AMBAC) (0.38) Re-Finance First 3 Wartsila (0.22) Senior Debt Adj. (0.68) Vitol $1.5MM ($0.4MM) 1.00

Revised Base Rate Request 5.68

Leased Generator Surcharge (3.08)

Net Base Rate Impact 2.60

● LEAC Resubmitted With Lower Prices and Revised Aggreko Dispatch. Current Fuel Portion - (2.57) C/KWHr Deferred Fuel - 3.81 C/KWHr

– With Medicaid Reimbursements, Deferred Fuel Charge can be Waived.

● Resulting Net Rate Impact is Only 0.03 C/KWHr. Note: LEAC Rates Subject to Fuel Price Variability.

W-000032



Residential Electric Rates

TargetLine June 30, July 31, August 31, Dec. 31, Dec. 31,No. 2019 2019 2019 2019 2020

(A) (B) (C) (D) (E)Residential Rate

1 LEAC 19.26 19.26 16.69 16.69 11.38 2 BASE 20.60 23.68 26.28 24.49 22.50 3 Total 39.86 42.94 42.97 41.18 33.88

Adj.4 LEAC - (2.57) - (5.31) (2)5 BASE 3.08 2.60 (1.79) (1) (1.99) (3)6 Total Adj. 3.08 0.03 (1.79) (7.30)

(1) Vitol Buyout(2) HUD Projects (STT Generation / Renewables)(3) Cancel APR Lease

Description

Cents/KWhr

W-000033



● PSC Hearing Schedule for July 31, 2019.● PSC Needs to Take Following Action at the Meeting:

1. Approve LEAC Decrease of 2.57 C/KWHr.2. Deny Deferred Fuel Charge of 3.81 C/KWHr.

Will Continue to Seek Medicaid Reimbursements.3. Approve Permanent Base Rate Increase of Approximately 5.68 C/KWHr

Meet with PSC Consultants Next Week to Finalize Increase. Allows Previously Identified Serious Investors to Consider Vitol Buy-Out.

4. Order That Leased Generator Surcharge be Removed When 3. Goes Into Effect.5. Order That the LEAC Decrease and New Base Rates Begin Billing at the Same Time e.g. 30 Days After Notice of

Rates Issued. ● The Above Actions were Reviewed with PSC Commissioner Raymond Williams on Wednesday, July 10.

This Would Maintain Residential Rates at Approximately 43 Cents/KWHrVs.

Approximately 49 Cents/KWHr if Vitol Cuts Off Propane Supply

W-000034


Appendix W-000035


● In total, GVI Entities owe WAPA $30.5 million (See Page 13).– 5 GVI Entities make up 89% of amounts owed:

Juan F. Luis Hospital – $11.7 million. Schneider Reginal Medical Center - $10.5 million. Waste Management - $2.4 million Housing Authority - $1.6 million UVI - $0.8 million

● WAPA has requested $22.9 of Medicaid Reimbursement to pay-off hospital receivable.– Monies will be used to pay past due amounts.– Receipt of this money is important, but only helps to pay-off a small portion of amounts owed and does not

help WAPA resolve its current operating deficit.

● Balance of $7.6 million will still be owed to WAPA.– GVI needs to develop plan to pay-off this balance and to take measures to ensure that all GVI Entities stay

current.

GVI Receivables W-000036


GVI Receivables

Total TotalDepartment Electric Water Total

JFL 9,496,786$ 2,219,440$ 11,716,226$ SRMC 9,920,003 572,989 10,492,992 WASTE MANAGEMENT 2,316,767 95,795 2,412,562 HOUSING AUTHORITY 49,295 1,594,639 1,643,934 UNIVERSITY OF THE VI 663,685 94,915 758,600

OTHER INDEPENDENT 333,558 50,105 383,663

DEPARTMENT OF FINANCE 1,477,730 1,225 1,478,955 BUREAU OF MOTOR VEHICLE 47,700 282,894 330,594 PUBLIC WORKS 157,203 36,250 193,453 HOUSING, PARKS & REC. 4,311 165,564 169,875 ARMY NATL GUARD-ADJGEN 155,828 308 156,136 OTHER EXECUTIVE BRANCH 756,397 49,168 805,565

TOTAL 25,379,262.67$ 5,163,292.00$ 30,542,554.67$

Over 30 Days

W-000037

2018 12 09 WAPA PSC Discussion DocSlide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16

Binder12019 07 09 Vitol to WAPA Default Notice 2019-07-09[2305843009303318275]2019 07 12 WAPA PRESENTATION TO GOVERNOR2019 07 22 WAPA PRESENTATION ELECTRIC RATES UPDATE

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