ST. THOMAS - The V.I. Water and Power Authority has been billed $3.17 million more than it was authorized to pay in outside consulting costs related to the alternative energy plant bidding process that led to the utility's deal with Alpine Energy.

Now, one of the consultants has threatened to stop doing work for the utility, putting $30 million in financing for new projects in jeopardy.

WAPA originally authorized spending $2 million in fees to outside companies to help the utility review proposals and select a company to build alternative energy plants in the territory. WAPA has been billed $5.17 million by from three firms for their work on the project, and Executive Director Hugo Hodge is asking the board to authorize a total of $6 million to complete the permitting process.

WAPA has been billed the following for work done during the two-year selection process:

-Β $482,213 from Washington-based consulting firm Boston Pacific for engineering review.

-Β $1,291,732 from Seattle's R.W. Beck and Associates for technical review work.

-Β $3,396,040 from the multi-national law firm Skadden, Arps and Slate.

At a special meeting Tuesday, the board authorized Hodge to pay R.W. Beck up to $1.5 million for past and future work on the project. According to Nellon Bowry, WAPA's chief financial officer, WAPA is approximately $500,000 behind in its payments to R.W. Beck because the utility had been billed more than the board had authorized it to pay.

WAPA needs R.W. Beck to complete an engineering report, a critical piece of financial data that the utility needs to be able to refinance $40 million in 1998 bonds. WAPA is looking to take advantage of lower interest rates and float an additional $30 million in bonds to fund infrastructure improvements while still maintaining its $17 million annual debt service.

Hodge said he will have to bring similar requests back to the board for Boston Pacific and Skadden, Arps and Slate, so that WAPA can pay the bills from the bidding process. Last week, the WAPA board voted to petition the V.I. Public Services Commission to allow it to spread out the cost of the consulting fees, which will be paid by the ratepayers, over 42 months.

Although a final list has not yet been approved by WAPA's board, proposed projects are expected to cut down on blackouts and decrease line losses on St. Croix, strengthen the utility's link between St. Thomas and St. John with a new underwater electrical cable, and get WAPA's grid ready to connect to the two waste and petroleum coke energy plants Alpine Energy Group is planning to build.

In an interview, Hodge stressed that the proposed capital projects are not being undertaken in preparation for the Alpine deal, although he conceded that the two proposed plants could not be built without the upgrades.

"This isn't being spent because of the Alpine project," Hodge said, adding that these projects are necessary with or without the proposed plants.

In August, WAPA signed two 20-year power purchase agreements with Alpine, for a plant on St. Thomas in Bovoni and on St. Croix between the HOVENSA and Renaissance properties on the island's south shore. The plants will burn garbage that would otherwise have gone to landfills and would bolster the energy produced from the trash by also burning petroleum coke - a byproduct produced by the HOVENSA oil refinery.

Hodge said he plans to ask for authorizations to pay the three companies a total of $6 million so that WAPA can pay any future costs it may incur through Senate hearings, the permitting process, and public hearings.

In an interview after the meeting, Hodge noted that WAPA will need to pay travel expenses for the companies and also compensate them for the time they spend preparing for and testifying at the hearings. Hodge also plans to bring the firms down to the islands for a public forum on the Alpine Energy deal that WAPA has proposed to hold in mid-January.

"All of the people in the paper asking for additional public hearings don't realize that adds additional cost," Hodge said.

V.I. Department of Planning and Natural Resources Commissioner Robert Mathes cast the sole vote against authorizing the $1.5 million in payments to R.W. Beck.

"I'm not comfortable with this at all," Mathes said. "The amount of money that's been spent here, it's an awful lot to swallow."

Mathes said that the expenditures were likely to raise questions from "a certain type of audience" and called for an internal audit of WAPA's bid expenditures.

"I just want to be sure that we've done our due diligence to ensure that the funds that have been identified and spent to date are all above board and very legitimate," Mathes said in an interview.

Hodge and Bowry confirmed after the meeting that an internal audit would be forthcoming. The utility provided a list of total amounts billed by each firm during its Nov. 19 regularly scheduled meeting but could not provide a detailed list of expenditures on Tuesday. Both Hodge and Bowry said they would provide a list as soon as it is available, which they expect to be next week.