Sept. 25, 2003 – The Public Services Commission voted on Wednesday to defer action on the Water and Power Authority's request for an emergency water rate increase, and to grant Innovative Telephone certification for another year that will allow the company to continue receiving some $33 million in annual federal subsidies.
WAPA officials said that if the emergency water rate increase is not granted, the utility will go into default on its bonds. The authority has to recoup $2.9 million by July 2004 in order to meet the minimum requirement for its debt service needs, they said.
"We must set the wheels in motion to correct that problem, and that problem at this particular time can only be corrected by an emergency rate increase," WAPA's executive director, Alberto Bruno-Vega, said.
Nonetheless, the commission, after much heated discussion, voted to suspend action on the rate increase request for eight months — the maximum time possible by law; to have hearing examiner George Eltman evaluate the emergency aspect of the request by Oct. 30; and to continue its water rate investigation, with a final report due by April 30.
"There's a pending financial crisis that's looming over this territory," commission member Verne David said. "I don't think it's fair to add the rate increase at this time."
Bruno-Vega told commissioners that the longer they wait to put the rate increase into effect, the higher the rates will need to be.
Had the increase gone into effect on Oct. 1, as WAPA had earlier requested, ratepayers would have seen an emergency increase of 16.2 percent in their water costs. (An earlier figure he had cited was 15.2 percent. See "WAPA wants to raise water bills by 24.5 percent".) WAPA then planned to seek an additional hike of 9.3 percent, which would bring the total increase to 24.5 percent.
Bruno-Vega said he hopes the hearing examiner's evaluation will substantiate WAPA's claim that there is a "real emergency" and that the PSC will approve a rate increase effective Nov. 1. If that happens, he said, an increase of 18.2 percent will be necessary.
"If you wait until June, rates will have to be increased by 140 percent," Bruno-Vega said. This would be "unbearable" to consumers, he added.
Valencio Jackson, the PSC chair, said he was tired of consumers complaining about rate increases. The commission earlier this year approved two increases in WAPA's electrical rates and recently okayed a 17 percent increase in telephone rates.
Jackson said his wife told him he would sleep in the "dog house" if the commission approved WAPA's requested water rate increase. "I do not believe this is an emergency," Jackson said.
Commission member Alric Simmonds said: "The situation that WAPA is in is not unique. There are many utilities facing the same problem, and they are finding other ways to deal with it."
Simmonds asked Bruno-Vega whether the authority could not "squeeze" its operating budget," rather than impose another increase on customers.
"Coming to the PSC to request this rate increase is the only short-term cure," Bruno-Vega replied. "We are at a stand-still right now."
If the PSC fails to grant WAPA the emergency rate increase, he said, the utility will go into default on its bonds. If that were to happen, he said, the authority would face reduced prospects for future borrowing on the bond market and also face the possibility of receivership — and with it loss of financial control of the authority.
Innovative certified for continued federal subsidies
In other business on Wednesday, the PSC granted another year's Universal Service Fund certification to Innovative Telephone, formerly V.I. Telephone Corp. or Vitelco, despite the protests of an angry customer and former Innovative employee, Arthur Joseph.
USF certification, which must be granted and renewed annually by a phone company's regulatory agency, allows the utility to receive federal subsidies intended to make basic telephone service affordable to low-income users in rural areas and other remote locations. The most recently reported data from the Universal Service Administrative Company show that the phone company now receives more than $33 million a year in federal subsidies. (See "Phone company's federal subsidies exceed $33M".)
"The PSC has a responsibility to hold off certification until Innovative proves that they have utilized these funds in an appropriate manner, for the intended purposes," Joseph told the commission. He said he believes the company is using the funds in other ways.
Innovative Telephone submitted the request for annual certification this month, with a Federal Communications Commission deadline of Oct. 1.
"You-all need to have some respect," David told Innovative officials, chiding them for not having put the request in earlier. However, he told his commission colleagues that Innovative "has us" — because denying the certification would affect the public negatively.
"You can get your Universal Service Fund certification, but the people of the Virgin Islands will expect nothing less than the quality of service we're entitled to," David told the company representatives.
The commission also voted to require the telephone company to provide quarterly reports detailing how the money is being used.
Commission members present were Jerris Browne, David, Jackson, Simmonds and Alecia Wells. Desmond Maynard was excused, and Sens. Luther Renee and Shawn-Michael Malone, who are non-voting members, were absent.
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