Feb. 14, 2005 – The Senate Government Operations and Consumer Protection Committee took testimony from the V.I. Water and Power Authority and the Public Services Commission Monday concerning the increasing cost of electricity in the territory. Nothing new was exposed at the hearing.
Senators heard the same story from WAPA that the rate increases were due to increasing fuel costs. They also heard the same story from the Public Services Commission that WAPA continually fails to follow orders from the PSC and is burdening ratepayers because of its inefficiencies.
In a PowerPoint presentation, WAPA's Executive Director Alberto Bruno-Vega showed how world events affect fluctuations in the oil market and how that, in turn, impacts the levelized energy adjustment clause – what is passed on to the consumers to recoup money spent in purchasing fuel.
"Crude oil prices, in essence, behave like any other commodity," Bruno-Vega said. "They obey the laws of supply and demand. Whenever the supply is low and demand is up, prices tend to increase."
Bruno-Vega said another factor that may influence oil prices is the impact of inflation on the U.S. dollar.
On a chart going all the way back to 1947, Bruno-Vega showed how oil prices have changed over the years.
"These prices below $30 a barrel are a thing of the past," Bruno-Vega said.
Bruno-Vega said WAPA's plants should not be compared to plants on the U.S. mainland because the authority derives 100 percent of its electricity from petroleum fuel, whereas most areas in the mainland derive their electricity mainly from coal.
"We need to break away from our total dependency on petroleum fuel," Bruno-Vega said.
Committee Chairman Adlah "Foncie" Donastorg told Bruno-Vega his "comprehensive presentation" may "cloud the issue at hand" for local consumers who may not be able to understand and who simply want to know why their bills are so high.
Jamshed Madden, PSC consultant, told the committee that WAPA failed, in its presentation, to underline other factors affecting the high prices such as line losses, which cost ratepayers $3 million annually.
PSC Chairman Valencio Jackson said, under pressure from the PSC, WAPA asked the inspector general to investigate the high losses of power on the island of St. Croix.
"Even after WAPA had the inspector general's report, WAPA reported to the PSC that theft wasn't a major issue, though it refused to provide a copy of the inspector general's draft report to the commission," Jackson said. "It took the public release of the report to reveal the true picture. Much of the power was not lost – it was just going to friends of well-placed personnel for free."
Jackson told the committee that WAPA's electricity rates were the highest under the American flag with the possible exception of one or two of the out-islands in Hawaii.
"WAPA now costs a resident using 1,000 kilowatts per hour $226 per month," Jackson said. "In the even more remote island territory of Guam, which does not have a large oil refinery, the rate is $124 per month for the same 1,000 kilowatt hours."
Jackson said over the years, WAPA has been very resistant to the orders placed upon it by the PSC and is currently challenging the jurisdiction and authority of the PSC in five separate lawsuits.
"The PSC's efforts to improve accountability and ensure that the Virgin Islands are provided the services for which they pay such high rates have been met with the equivalent of a temper tantrum by WAPA," Jackson told the committee. "Instead of working with the commission, WAPA has chosen to deliberately and unashamedly defy the laws of the Virgin Islands and the orders of the commission."
Jackson urged the Senators to clarify the law as to the scope of the commission's authority in regards to WAPA.
"If this Legislature acts, it will have the ability to precisely determine the boundaries of responsibility for the WAPA board and the Public Services Commission," Jackson said.
Bruno-Vega said a public regulatory commission should regulate privately owned utilities, not a public utility that already has a governing board in place.
"Don't put another government entity over another government entity," Bruno-Vega said. "That's bureaucracy galore. That is an aberration."
He added if officials don't feel WAPA's executive director, the governing board or the governor, who instituted the board members are doing a good job, then they should get rid of them and get a whole new batch.
Under questioning by Donastorg, Inspector General Steven van Beverhoudt said in addition to line loss and theft by WAPA employees, there was evidence that some WAPA board members were also involved in meter tampering.
However, Bruno-Vega said he did not know of any instances of wrong doing by board members, and he would investigate those complaints if any were reported to him.
Sen. Ronald Russell asked van Beverhoudt whether WAPA had acted on any of his recommendations. Van Beverhoudt said the utility acted on some of them but has not yet indicated they were implementing others.
Russell asked if the inspector general's office were taking steps against WAPA for their failure to implement the recommendations.
"We do not have enforcement authority," van Beverhoudt said.
Several senators said they would work on legislation in hopes of lessening the cost to consumers. Donastorg said he is working on legislation for the repeal of the street lighting surcharge, which he feels is "double taxation."
Senators present at Monday's hearing were: Donastorg, Russell, Liston A. Davis, Terrance "Positive" Nelson, Shawn-Michael Malone and Juan Figueroa-Serville. Sen. Louis Hill was excused due to a death in his family.
The committee will hold a meeting on St. Croix Feb. 23 to discuss the price of gasoline on the island.
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