[Congressional Record (Bound Edition), Volume 158 (2012), Part 12]
[Extensions of Remarks]
[Page 16222]
[From the U.S. Government Publishing Office, www.gpo.gov]




          U.S. VIRGIN ISLANDS NEED FOR EMERGENCY ENERGY RELIEF

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                       HON. DONNA M. CHRISTENSEN

                         of the virgin islands

                    in the house of representatives

                       Tuesday, December 4, 2012

  Mrs. CHRISTENSEN. Mr. Speaker, I rise today to introduce the Virgin 
Islands Energy Crisis Relief Act of 2012. In January of this year, the 
HOVENSA Oil Refinery located on St. Croix in my Congressional district 
the U.S. Virgin Islands, announced that it would cease refinery 
operations because of the global economic slowdown, the addition of new 
refining capacity in emerging markets and the current low domestic 
price of natural gas. This announcement was an economic gut blow to the 
U.S. Virgin Islands not only because of its overall impact; a potential 
$580 million reduction in direct gross economic output and $92 million 
in overall government tax revenues beginning in FY 2012; and the direct 
termination of 2,471 employees and subcontractors which represents 12% 
of total employment and 27% of average gross pay of the private sector 
on St. Croix; but because of the crippling threat to energy 
affordability which inhibits economic growth and sustainability.
  The HOVENSA refinery, which was one of the ten largest in the world, 
provided four percent of its refinery products in the form of gasoline, 
diesel, jet and propane fuel to the U.S. Virgin Islands. The HOVENSA 
refinery provided at least 90% of energy for the Virgin Islands Water 
and Power Authority, which received fuel to power the utility at a 
reduced cost based on the average cost of crude delivered to the 
refinery or $2.00 less than the New York harbor landed fuel of the same 
type. The refinery also supplied most of the territory's gasoline 
service stations also at a reduced cost. According to VIWAPA, 76% of 
its costs are for the purchase of fuel. Even so, Virgin Islands 
residents and businesses pay electric power rates in the range of 44 to 
48 cents per kilowatt hour, among the highest energy costs in the 
nation.
  The greatest threat to the Virgin Islands economy and way of life 
posed by the closing of the HOVENSA refinery is energy affordability. 
While HOVENSA has agreed to supply fuel to the end of 2012, the Virgin 
Islands is in need of emergency relief in order to stabilize the cost 
of water and electricity to its business and residential consumers in 
the near future. In his 2012 State of the Territory address, Governor 
John deJongh said: ``Without reliable electricity and water there will 
be no new businesses. Without reliable electricity and water, we will 
have no economic development, fewer jobs and lower revenues, all 
contributing to a downward spiral.''
  In light of the potential for economic catastrophe that currently 
exists, we are exploring an emergency appropriation for the purpose of 
stabilizing the economy of the Virgin Islands for a period of time, by 
subsidizing the cost of fuel, which the utility passes on to the 
consumer, both residential and business, through a funding mechanism 
called the Levelized Energy Adjustment Clause, known locally as the 
LEAC.
  In recent months, the Government of the Virgin Islands and the 
utility, the Virgin Islands Water and Power Authority, have moved to 
implement a series of initiatives aimed at stabilizing the energy 
situation in the territory. They have published an Energy Action Plan 
that lists the following as its strategy to meeting the islands needs 
for energy. It includes:
  Implementing measures to enhance production efficiency at existing 
power generation facilities;
  Converting base load power production from fuel oil to liquefied 
natural gas or liquefied petroleum gas;
  Developing grid interconnection between the Virgin Islands and Puerto 
Rico;
  Maximizing the development of solar and wind resources;
  Pursuing biomass energy and ocean thermal energy as potential 
diversification of base load energy.
  While noteworthy, all of these goals are long term solutions that do 
not address the impact to homes, businesses and the entire Virgin 
Islands economy in the short term, hence the request for emergency 
relief. The Virgin Islands Energy Crisis Relief Act is aimed at 
lowering the cost of fuel to utility and therefore to the consumer; 
facilitating the conversion of the existing plant to utilize liquefied 
natural or liquefied petroleum gas; and increasing the number of 
residents who qualify for relief through the Low Income Home Energy 
Assistance Act (LIHEAP).

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