Southern Energy partnership in water, power operations worth more than $380 million to U.S. Virgin Islands
CHARLOTTE AMALIE, U.S. Virgin Islands Southern Energy Inc., a unit of Southern Company, has offered a package worth more than $380 million to form a new company, Virgin Islands Electric and Water (VIEW), in partnership with the U.S. Virgin Islands government.
The new company will consist of the power generation and water production and distribution assets currently held by the U.S. Virgin Islands Water and Power Authority (WAPA), a government agency. WAPA will continue to exist as a government agency, owning the power poles and lines. WAPA employees will become VIEW employees.
Southern Energy will hold 80 percent of VIEW, while the government will hold 20 percent.
This partnership would benefit everyone in the U.S. Virgin Islands power and water customers, business owners, job seekers, taxpayers. Everyone wins, said Richard J. Pershing, president of Southern Energys Americas Group.
The $380 million package would include $105.35 million cash along with the assumption of $153.9 million in WAPA bonds and forgiveness of the $24 million government agencies owe WAPA for services.
Several steps remain before the agreement is final, including public hearings and approval from the U.S. Virgin Islands Legislature. Additionally, the partnership would go forward once the Federal Emergency Management Agency says that the new structure will allow it to continue to provide disaster recovery assistance following hurricanes or other events.
VIEW would make payments toward fuel, property, gross receipts and income taxes that will increase over time. As 20 percent owner, the U.S. Virgin Islands government would also be entitled to ongoing dividend payments.
Southern Energys proposal also guarantees system reliability would improve under VIEW. Additionally, there would be no increase in rates the first two years, and rates would go down relative to inflation afterward.
VIEW would operate more than 230 megawatts of oil-fired generation capacity and the production of 8 million gallons a day of potable water.
VIEW also would commit $1 million to an economic development program designed to attract new investments and jobs to the U.S. Virgin Islands. Another $1 million of revolving credit would be made available to current WAPA vendors or businesses interested in becoming VIEW vendors. Additionally, the partnership would commit 1 percent of its profits to charities, particularly those with an education focus.
Southern Company has a long tradition of supporting economic development in its traditional territory in the Southeast United States, and the Southern Energy subsidiary has spread that tradition while helping the company grow in other parts of the nation and the world, Pershing said.
Southern Energy also would protect the jobs of union employees and keep them in their existing retirement plan.
Southern Energy Inc., with operations in 12 countries on five continents, develops, builds, owns and operates power production and delivery facilities and provides a broad range of services to utilities and industrial companies around the world. Its Southern Company Energy Marketing unit provides energy trading, marketing and financial services and other energy-related commodities, products and services to customers in North America.
Southern Company (NYSE: SO), the largest producer of electricity in the United States, is also the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Savannah Electric.