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PSC Wants Reports on WAPA's Streetlight Funds

Nov. 10, 2004 — The Public Services Commission Wednesday threatened to suspend a streetlight surcharge added to the bills of ratepayers by the V.I. Water and Power Authority, if the utility failed to produce requested documents and bring itself in compliance with an order directing the surcharge.
The Legislature transferred the responsibility for street lighting from the Public Works Department to WAPA in December of 2001. The PSC, at WAPA's request, granted the utility a $1.50 surcharge for the maintenance of the streetlights, but not without several requirements, namely an annual report with breakdown of the spending of the surcharge.
"WAPA has not attempted to comply with the requirements," PSC member Verne David said. "They have not submitted any reports and have changed the agreed upon methods of accounting. The consumers can no longer bear the cost of this surcharge with all these uncertainties."
WAPA has received about $2.1 million annually from the surcharge. Alberto Bruno-Vega, WAPA chief executive officer, said this is the same amount that was paid to the utility previously by the DPW so they haven't gained a surplus to implement the expansion phase of the program.
However, PSC consultant Jamshed Madan said the levelized energy clause adjustment for the streetlights is being passed on in the base rate to the ratepayers at a higher rate, resulting in a surplus of funds.
Bruno-Vega took offense, and told the PSC that its consultants were calling the WAPA personnel thieves.
"We have a shortfall of revenues to provide street lighting," Bruno-Vega said adding the residential class alone cannot pay for the maintenance of the streetlights and WAPA has been paying the deficit from its own revenues.
David said the fact remains that WAPA has still failed to produce documents to the PSC and has changed the accounting methods by commingling the funds.
"In light of the fact that the ratepayers are bearing this cost, there needs to be greater accountability," David said. "The taxpayer has a right to know how each dime they pay is accounted for."
WAPA Chief Financial Officer Nellon Bowry told the PSC the authority is still committed to the street lighting program. Bowry said the streetlight surcharge has been treated as an alternative source of revenue for the money paid to the utility previously by DPW.
PSC Chairman Valencio Jackson requested a breakdown of all costs related to streetlights and the amount of revenues gained from the surcharge.
Bruno-Vega warned, if the surcharge is suspended, WAPA will have no funds to continue the expansion phase of the program or to restore 1,500 lights in St. Croix.
"We need to devote our scarce human resources to maintenance not to file reports," Bruno-Vega said of the many reports being sought by the PSC. "We try to do the best with the resources we have."
The PSC also took issue Wednesday with WAPA's failure to successfully implement a reduction plan for its line losses.
Larry Gawlik, consultant with the Georgetown Consulting Group, said although WAPA has said it is addressing the losses to both areas of water and electricity, there has been no proof to that effect.
"WAPA is now realizing $7 million in losses annually," Gawlik said. "These losses are totally within the control of the management of WAPA."
In June, WAPA filed a report of its loss study program with the PSC. Gawlik said in the report WAPA stated that besides theft, losses were caused by other administration factors including incorrect billing and false meter reading.
"WAPA is also paying for more fuel than it needs to produce electricity," Gawlik said.
Gawlik gave the PSC recommendations to address WAPA's line-loss problem:
— – WAPA should be held accountable for complying to its loss study program for reduction within a 30-month period instead of the five-year period the authority had requested.
– – WAPA should be given performance standards set by the commission.
– – WAPA should provide an annual report on how well it is doing to the commission. Reporting should also be done on a monthly and quarterly basis.
– – WAPA should adequately fund its loss reduction program.
– – WAPA must bear the burden of proof in showing that complying with a 30-month period instead of a five-year period would hurt the ratepayers.
Gawlik said the ratepayers would save $10 million a year if the 30-month period was implemented.
Sen. Luther Renee, PSC non-voting member, made a motion to rescind the automatic LEAC adjustment the commission granted to WAPA in August and requested the authority appear before the PSC when a LEAC increase is necessary. Renee's motion could not carry, however, because of his non-voting status.
The automatic adjustment, which was implemented for a one-year period, allows the Authority to increase or decrease the LEAC if the price of oil rose or fell $1.75 above or below the projected price.
None of the voting members brought Renee's motion to the floor, although Jackson, who cannot make motions because of his position, said he would have rescinded the automatic adjustment if the PSC was "a one-man show."
PSC member Jerris Browne moved that the PSC approve three of Gawlik's recommendations – for WAPA to comply with the 30-month reduction program for line losses, for WAPA to be given performance standards set by the commission, and for the authority to submit quarterly reports to the PSC. The motion was approved unanimously.
WAPA was also charged its annual assessments amounting to $602,000, but the Authority was only prepared to pay $75,000.
"We have to pay in increments," Bowry said. "Our cash flow does not allow us to make a $600,000 one-time payment."
Jackson requested a schedule as soon as possible for the outstanding assessments.
The. V.I. Code stipulates that annual assessments to the PSC should be paid by Sept. 30 of each year. Bruno-Vega said he received the assessment billing Oct. 12.
Bruno-Vega asked that the assessments be billed quarterly instead of yearly.
But Browne said, "These funds are supposed to be budgeted."
All members of the PSC were present at the hearing except nonvoting member Sen. Shawn-Michael Malone.
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