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Who Wants to Buy WAPA or Hospitals?  

 

ms411
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July 14, 2016 7:43 pm  

What investor would want them? Please explain why anybody would even want them. I think WAPA had an offer a few years back, but it went nowhere.

BTW, PR utility cut off power to 2 private cancer centers for non payment. Not the first health facility they disconnected. The utility was owed millions by at least one facility. Article was in today's Daily News.


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OldTart
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July 14, 2016 7:57 pm  

An excellent offer was made for WAPA many years ago but the government decided not to accept it.

I believe utility companies can legally shut off private hospitals and clinics but imagine there are safeguards in place to protect state and government-run hospitals. A private hospital's service in PR was shut off in March and they relied on generator power until a judge ordered the power be restored.


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ms411
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July 14, 2016 8:40 pm  

I keep seeing recommendations that VI privatise some government functions. You can't privatise if nobody wants to buy. The VI may have missed the chance.

If they're privatised, what happens if they can't turn a profit?


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daveb722
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July 14, 2016 9:31 pm  

Maybe Mapp can have his Chinese friends buy them. 😛


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Alana33
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July 14, 2016 9:32 pm  

If they can't turn a profit then they'll at least not be bleeding the VI coffers dry.
But face it, every government entity is poorly run with too many administrative positions and waste compared to those run by private companies.


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ms411
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July 14, 2016 10:00 pm  

Alana, that may have been the case years ago, but I'm not so sure that's always the case now. There are so many loopholes and tax benefits, investors can pay themselves inflated salaries from borrowed funds (or grants) and declare bankruptcy leaving vendors and employees owed payment.

The deck is stacked in favor of "private enterprise" which is why Bernie Sanders is so popular with many people. There are many good private sector companies, but they have a hard time competing against companies that don't pay fair share of taxes.

A firm like Google can afford to pay higher wages and offer better benefits. Small firms can't compete.

It's worse in VI because mom and pop businesses can't afford to offer benefits.

There are no easy answers.


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Matt T
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July 15, 2016 9:46 am  

Look at how the water production was privatized. Private entity builds water plant and sells that water to WAPA who then distributes it. No capital outlay by WAPA and the price at which they buy the water vs. what they charge customers could possibly give them the ability to turn a profit (in theory). Seems like it is mutually beneficial for both the private entity and WAPA.

Same could be done with power. Private entity takes over power production and improves efficiency and reliability. They sell the power to WAPA distribution and then WAPA can in turn make a profit while being able to focus strictly on maintaining power grid. The net metering customers and even the solar farms could be used to boost the revenue for WAPA since technically they are part of the grid and not used by power plant to generate electricity. This would then give WAPA an incentive to use their profits to install more solar farms and maybe even some wind turbines.


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Gator's Mom
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July 15, 2016 10:14 am  

Look at how the water production was privatized. Private entity builds water plant and sells that water to WAPA who then distributes it. No capital outlay by WAPA and the price at which they buy the water vs. what they charge customers could possibly give them the ability to turn a profit (in theory). Seems like it is mutually beneficial for both the private entity and WAPA.

Same could be done with power. Private entity takes over power production and improves efficiency and reliability. They sell the power to WAPA distribution and then WAPA can in turn make a profit while being able to focus strictly on maintaining power grid. The net metering customers and even the solar farms could be used to boost the revenue for WAPA since technically they are part of the grid and not used by power plant to generate electricity. This would then give WAPA an incentive to use their profits to install more solar farms and maybe even some wind turbines.

The VI power grid is very small and complicated. There is limited space to add more solar and/or wind generation. You still have to have the backup generation from traditional power plants when the sun doesn't shine (like at night) and/or the wind doesn't blow.

There are examples of delivery and transmission/generation functions being pulled apart. But I can't imagine any company buying the old power plants as they are even with the recent conversion to natural gas. You would have only one customer - or maybe two if you could figure out how to get power to the BVI but that's complicated, too.

WAPA is crippled by its financial relationship with the VI government and hospitals.


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Alana33
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July 15, 2016 10:30 am  

WAPA and the Hospital are government entities which is why they are not properly run.


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Gator's Mom
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July 15, 2016 10:47 am  

WAPA and the Hospital are government entities which is why they are not properly run.

I'm not convinced WAPA is poorly run.

Because it is a FERC regulated utility, WAPA has to carry the burden of unpaid debt from the government and hospitals on its books. The result is having its bonds turn to junk. Debt/equity/cash on hand ratios are askew.

Without bonds, WAPA cannot finance long term improvements to its system and is relegated to propping up old, less efficient equipment rather than replacing it.

Additionally, because the government and hospitals won't/can't pay their bills, the cost of WAPA's daily operations is then placed squarely on the shoulders of residents and private enterprise. Thus, the chronic adjustments and high rates for the average rate payer.


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Alana33
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July 15, 2016 10:55 am  

True but WAPA has been poorly run for decades and with the VI Government's inability to pay its debts, I don't see things getting any better.


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OldTart
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July 15, 2016 10:59 am  

I agree with Gator. Nor do I think all VI government agencies are improperly run and nor is the VI government unique in this respect. There's massive wastage throughout state and federal government agencies. Despite everything, WAPA has made significant forward strides in the last 30 years (which is my only frame of reference) but I think it's (unfortunately) human nature to dwell on the negativity while overlooking positivity.


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sunshinefun
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July 15, 2016 11:23 am  

The day of reckoning is coming for the GVI whose bonds and those of its semi-autonomous agencies are already considered junk.

I will welcome the formation of the financial control board that will ultimately take over the decision making process from the buffoons running things now.

As for WAPA and the hospitals, there is always a private sector buyer who will snap up these assets and turn them into the goldmines that they are.

But the days of free healthcare at SRMC and JFL for locals and non-payment of utility bills by GVI agencies will come to a screeching halt.

Its going to be exciting to watch the abrupt change in culture.


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Gator's Mom
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July 15, 2016 12:33 pm  

WAPA needs to be paid what's owed. Privatizing WAPA would prove little since, no matter what, it will be regulated by FERC rules. For residential rate payers, in the long run, a municipal utility is a better option since there is no pressure to produce profit for shareholders.


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Gator's Mom
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July 15, 2016 12:43 pm  

Both Schneider and JFL have a core business that could be attractive to a private buyer - hopefully to a single not-for-profit corporation.

Selling the hospitals will allow WAPA and vendors to be paid, establish new relationships with hospital staff and provide a trust fund to improve community health.

The first thing I heard when I was on island (STX) a few weeks back was from a cab driver who asked if I had heard the hospital might be privatized. Anyone else hearing that?


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CruzanIron
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July 15, 2016 12:46 pm  

I will welcome the formation of the financial control board that will ultimately take over the decision making process from the buffoons running things now.

The VI opted out of that option thanks to our representative and the king/queen.


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STTsailor
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July 15, 2016 3:37 pm  

My experience with WAPA has been generally positive in terms of customer service and reliability. If WAPA could collect from the government and the hospitals then they should be ok.

The problem here this endless chain of IOUs. It has to stop. This is like old soviet economy circa 1960-1970.


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