The global surge in fuel costs has hit hard in the far-flung U.S. Virgin Islands, adding another financial pressure to a government-run utility already fighting to stay solvent, placate an unhappy supplier and find backing to develop renewable power, WSJ Pro reported. The Virgin Islands Water and Power Authority has hovered near bankruptcy for years, but its financial woes are intensifying. Its most important fuel supplier, Houston-based Vitol Inc., has threatened in recent weeks to cut off shipments of liquid propane if WAPA doesn’t pay back $150 million in contract arrears. Propane makes up the bulk of WAPA’s power generation, and it can’t afford to keep the lights on for long without continued shipments from Vitol. The problem is that WAPA lives hand-to-mouth, barely scraping together the cash every week to order fuel, pay wages and make interest payments to banks and bondholders. Vitol’s demands come at a bad time for WAPA, already pummeled by rising fuel costs and in the midst of negotiations to bring utility-scale solar and battery power to the U.S. territory’s largest island, St. Croix. The price of propane has gone up 22% for WAPA since the beginning of 2021, while diesel, its backup fuel, has increased 161%. WAPA hasn’t raised its customer rates as fuel costs increased, with help from a $28 million fuel subsidy it received from the Virgin Islands’ federal COVID-19 stimulus funds. Mr. Smith said he is trying to find roughly $35 million to upgrade WAPA’s power generators while replacing fossil-fuel generation with lower-cost solar.
