Alpine Agreements – Are They Valid?

The entire agreement between Virgin Islands Water and Power Authority (WAPA) and the Alpine Energy Group (AEG) may be invalid.

Research into documents related to this project, including the attached testimony of WAPA Executive Director Hugo Hodge, Jr., reveal that the critical Request For Proposal (RFP) criterion for a non-oil based renewable energy provider was not satisfied in the AEG proposal.

Further research into the VI Code Title Thirty  provisions reveals that numerous aspects of Alpine’s agreement with WAPA, from the  nonrenewable fuel source (PetCoke) used in the “waste-to-energy” process to the cost structure defined for in the Power Purchase Agreements (PPA’s), are in direct violation of  the Virgin Islands Public Utilities statute for these types of projects.

And in a stunning comment in an article in the October 3 edition of the Virgin Islands Daily News, VIPSC Chairman Joseph Boschulte raised even more questions about Alpine’s ability to meet Code provisions, stating “Also, because the facilities will burn petroleum coke along with solid waste, they do not qualify as a renewable energy producer under the V.I. Code, a requirement of being a qualified small power producer. “

Wasn’t that the whole point of this project?

The VI Public Services Commission (PSC) must seriously consider whether moving forward on this project will be a violation of the law as it cannot issue an Order that is not in the public interest. Coupled with questions that have already been raised about the insufficient notice of the Alpine public hearings October 5-6, the only responsible action at this time is to postpone these sessions.

The Request For Proposal (RFP)

In April, 2008, WAPA Executive Director Hugo Hodge, Jr. testified before the US Congressional Committee on Natural Resources on St. Croix, which was co-chaired by VI Delegate to Congress Donna Christensen. In his testimony, Hodge stated that on February 28,  R.W. Beck consulting firm had completed a major study commissioned by WAPA and the PSC on alternative energy sources. Based on the Beck Power Supply Study, an RFP was issued soliciting proposals from qualified companies for non oil-based alternatives to supplement the VI energy supply. (Pages 6-7 of Hodge testimony, attached)

Of the 20 proposals submitted, 18 were pre-qualified and Alpine was chosen even thought petroleum coke, an oil-based product, was central to its “waste-to-energy” solution.

We cannot examine the actual Request for Proposal as it is no longer posted on the WAPA website and is among documents the public must request in writing from WAPA’s General Counsel. However, unless the RFP provisions were substantially different than those outlined in Hodge’s testimony, Alpine’s proposal should never have been considered.

In August, 2009, WAPA Executive Director Hugo Hodge, Jr. is quoted in a press release (attached) during a Government House signing ceremony of the WAPA Alpine agreement as saying that in 2007 an RFP was issued to renewable energy providers to develop a practical and environmentally friendly solution to rising fuel prices in the Virgin Islands.

The VI Code

Numerous aspects of this process violate provisions of the the VI Code.

1. If the PSC approves the WAPA and Alpine Power Purchase Agreements, it will violate the VI Code sec.( o) Chapter 46 which does not permit Alpine to burn Pet Coke along with solid waste and qualify as renewable energy producer.  WAPA Executive Director Hugo Hodge, Jr. is quoted twice as saying either that the RFP was issued soliciting proposals from qualified companies for non oil-based alternatives or that the RFP was issued to renewable energy providers to develop a practical and environmentally friendly solution to rising fuel prices in the Virgin Islands.  Alpine does not qualify according to the VI Code as a renewable energy provider and should not have been awarded WAPA’s Virgin Islands waste-to-energy contract.  The PSC is prohibited from granting any favorable consideration of the WAPA and Alpine PPA because doing so will violate the VI Code.
2. Under the terms of the agreement between WAPA and Alpine, “WAPA, at its own cost, will be responsible for arranging, procuring and delivering the Pet Coke to the facilities” on St. Thomas and St. Croix. However, the VI Code states that “ No Order may be issued under section 47 (by the PSC) unless the applicant for such Order demonstrates that he is capable and willing to cover all reasonably anticipated cost and expenses, including those of the public utility incurred under such Order.”  Therefore, the PSC cannot by law approve the AEG agreement unless Alpine is willing to cover the cost of the PetCoke now assigned to WAPA as an expense. (see Page 1, Alpine Contract, attached)  WAPA passing any cost related to the Pet Coke off to consumers through the LEAC will not be in the best interest of the public.
3. The PSC is currently in violation of the VI Code 15-day requirement for notices of Public Hearings.  The official notice of these hearings was released on Tuesday, September 29. This violation of the law is restricting the public from full participation in the hearings, now scheduled for Monday and Tuesday, October 5-6.
4. Both the PSC and WAPA have restricted public access to documents related to this issue; the PSC by only allowing access during business hours and WAPA by only offering access less than one day prior to the hearings and requiring that certain documents can only be obtained by submitting a written request to its General Counsel is totally unacceptable and inexcusable.
5. The VI Code states that “No Order may be issued under section 47 (by the PSC) unless it is in the public interest.”  The PSC is prohibited from issuing any orders in this matter because the public access and notification provisions of the Code were violated during this process.
6. Section 47 of the VI Code also requires that if the PSC does not issue any Order applied for, it must deny the application and state reasons for such denial.

A follow-up letter has been forwarded to the PSC on behalf of the people of the Virgin Islands outlining these concerns. We will keep you posted.

Hugo Hodge Testimony to Congressional Committee

Government House Release on Alpine

Alpine Conditions of Agreement

CIF Follow Up Letter to PSC

VI Daily News PSC article

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