The Virgin Islands Water and Power Authority is operating at a monthly deficit of two to three million dollars, according to testimony delivered Monday to lawmakers, creating pressure for dramatic rate increases that could exceed 50 cents per kilowatt-hour.
Karl Knight, CEO of WAPA, told the Committee on Government Operations, Veterans Affairs, and Consumer Protection that the utility collects less in customer charges than it spends providing electricity and water service to the territory. The financial squeeze is forcing hard choices about how to sustain operations without triggering service disruptions that would harm businesses and households across St. Thomas and St. John.
How the Territory Got Here
WAPA has not substantially raised residential rates in nearly six years, keeping the current price at 34.4 cents per kilowatt-hour despite climbing fuel costs. That restraint, while easing pressure on household budgets, has widened the gap between what the utility charges and what it costs to operate.
The numbers paint a stark picture. WAPA carries 101.7 million dollars in accounts payable and 188 million dollars in long-term debt. A turnaround management team from Ernst & Young has concluded the authority needs a cash infusion of approximately 375 million dollars to resolve its underlying financial crisis.
What Rate Increases Could Look Like
Knight explained that closing WAPA’s deficit through rate increases alone would require adding roughly eight cents or more to each kilowatt-hour. That would push residential rates above 50 cents per kilowatt-hour, a jump of roughly 50 percent or more from current levels.
For a typical household, the impact could be severe. A family using 600 kilowatt-hours monthly currently pays about 206 dollars. Under the proposed rate structure, that same usage could cost more than 300 dollars monthly—a difference of nearly 1,140 dollars annually.
Power Generation and Infrastructure
St. Thomas and St. John draw power primarily from the Randolph Harley Power Plant in Krum Bay, which must meet average peak daily loads around 60 megawatts. St. John has no local power generation, leaving it entirely dependent on undersea cables from St. Thomas.
On St. Croix, the Richmond Power Plant supplies the island’s average peak load of 43 megawatts. FEMA has approved funding to completely replace that facility with capacity of at least 86 megawatts, potentially easing future constraints.
Customer Service Problems Compound the Crisis
Beyond financial pressures, WAPA has struggled with operational challenges that frustrate customers. Malfunctioning meters are a persistent problem, making accurate billing difficult and eroding confidence in the utility’s ability to manage resources effectively.
The authority has selected Itron as a contractor to address the meter issues, though implementation timelines remain unclear.
What’s at Stake
Senator Avery L. Lewis, chair of the committee that heard testimony, highlighted the real-world consequences. Rate increases or service disruptions would ripple through households and businesses throughout the territory, hitting fixed-income residents especially hard while raising operating costs for employers.
Whether WAPA can secure the 375 million dollars needed to turn around its finances, negotiate better fuel procurement terms, or find other solutions remains uncertain. In the meantime, the monthly deficit continues to grow.
