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WAPA LOSES BID FOR EMERGENCY WATER RATE HIKE

Nov. 13, 2003 – The Public Services Commission said no on Thursday to the Water and Power Authority's request for a 7 percent emergency water rate increase that was recommended by its hearing examiner for the case.
At its regular monthly meeting on St. Thomas, the commission denied by a vote of 4-1 the emergency 7 percent rate increase WAPA wanted for water service. Jerris Browne made the motion for denial, and Verne David, Alric Simmonds and Alecia Wells gave him their support. The commission chair, Valencio Jackson, voted against the motion. Desmond Maynard was absent.
In taking the action, the PSC rejected the recommendation of hearing examiner George Eltman to approve the utility's request.
"I am concerned about being faithful to the commission's mandate," Eltman said. "However, I am satisfied and convinced that if WAPA is unable to meet its debt-service ratio, that is going to be a cost to the authority and indirectly to its ratepayers. This is not the moment to be punitive to WAPA. I can assure you no one is trying to pull a fast one on you here"
At the September PSC meeting WAPA had requested emergency and permanent increases totaling 18.2 percent, to take effect in November. After heated discussion, the commission voted to suspend action on that request for eight months — the maximum time possible by law — and to have Eltman evaluate the emergency aspect of the request by Oct. 30 and then continue the water rate investigation with a final report due by next April 30. (See "PSC defers decision on WAPA water rate increase".)
Eltman in his evaluation agreed that WAPA had an "emergency," but he reached a compromise agreement with the authority to request a 7 percent increase, which he said would add $2.70 to the average customer's bill.
"We believe that 7 percent is a reasonable amount," WAPA's executive director, Alberto Bruno-Vega, said on Thursday. But he added that if the authority did not receive the emergency increase, it would go into default on its bonded indebtedness. He said the increase would bring the utility new revenues of about $920,000, or 1.25 percent of the debt-service ratio.
The authority found out about the potential danger of going into default on its bond debt in July, when its fiscal year 2004 budget was being finalized, Bruno-Vega said in response to questioning by David. The matter was brought before WAPA's executive board and then before the PSC in September.
As things stand now, the water rate investigation will proceed, with the final report due in April, and then the PSC will make a final decision on the matter.
Jamshed K. Madan of the Georgetown Consulting Group, a consultant to the PSC, told the commission that a "regulatory asset" should be used in April to determine how much of a rate increase to give WAPA. He described a regulatory asset as an accounting mechanism that allows for special treatment to recover certain expenses. In WAPA's case, some of its expenses would be capitalized, he said, and a "small" surcharge would be added to ratepayers' bills.
WAPA authorities also gave the commission a brief update on the status of streetlights. Bruno-Vega said that on St. Croix all of the lights along Melvin Evans Highway from East Airport Road to Hannah's Rest have been repaired.
Senators Usie Richards and Norman Jn Baptiste attended the PSC meeting on behalf of Caribbean Energy Resources, a company they described as wishing to construct and own an "eco-industrial complex" on St. Croix. Richards and Jn. Baptiste urged the commissioners to "expedite" the process of certifying the company as a small power provider.
"We think that this is a win-win situation for the Water and Power Authority, as well as for the economic situation on St. Croix," Richards said. He said the project would create about 760 jobs.
The company presented a proposal to the WAPA board last April to supply power privately but found little receptivity to the idea. (See "Privately backed generator pitched to WAPA".)
In other action Thursday the PSC ordered Innovative Telephone, formerly V.I. Telephone Corp. (Vitelco), to pay outstanding assessments totaling $190,000. The company had refused to pay the assessments, petitioning for reconsideration — which has since been denied.
"Why is it that Vitelco is taking it upon themselves to hold back on paying the assessment?" Simmonds asked company counsel Julio Brady. "You've got to pay it. Then you can bring up your concerns and challenges."
Brady said Innovative Telephone might pursue further legal action on the matter. The unpaid assessments relate to a request to the PSC from Choice Communications to be granted regulatory status as a provider of telephone services. By law, Innovative, which has that status, must pay for the investigation of any other company making such a request.

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