Aug. 1, 2006–A bill to stabilize electricity rates throughout the territory could bring relief to thousands of V.I. residents. However, that's not welcome news for Water and Power Authority Executive Director Alberto Bruno-Vega, who has repeatedly claimed that legislation mandating rates could strike a serious blow to the utility, whose financials are currently "in the red."
The bill, scheduled to appear next week before the full Senate body, is a modified version of last year's Job Creation Act, which required that WAPA select a small-power provider for St. Croix and subsequently submit a negotiated contract to the Public Services Commission for review by a certain date. Two months ago, WAPA announced they would be terminating negotiations with the selected company, Innoventor Technologies, due to a number of factors (See "WAPA, Innoventor Terminate Negotiations").
After the announcement, Bruno-Vega said the utility would not be going back to the Senate to discuss future negotiations unless certain provisions included in the Jobs Creation Act are renewed.
When contacted Tuesday, Sen. Norman Jn Baptiste, primary sponsor of the Job Creations Act, said the Senate is not looking to reconsider the old bill–instead, a new bill, designed to stabilize electricity rates, will be introduced during a Committee of the Whole hearing slated for Aug. 7.
"This is different from what we had before," Jn Baptiste said, "although it does include some of the conditions outlined in the Jobs Creation Act."
WAPA, for example, is still required to enter into negotiations with a small-power provider for St. Croix. However, any agreement entered into by the utility would be at a cost of no more than 11 cents per kilowatt-hour. Jn Baptiste said senators were trying to strike a balance between the flat rate of 10.93 cents per kwh offered by Innoventor (which WAPA officials claimed would translate to a monthly savings of 19 cents for the average customer) and the 15-cent rate previously proposed by the St. Croix Renaissance Group.
According to the bill, the selected small-power producer must also be able to:
–invest no less than $150 million into St. Croix's economy over a period of four years.
–create and maintain a permanent workforce of no less than 400 individuals– 90 percent of which would be "bona fide" V.I. residents.
–establish related industries and facilities on St. Croix that would become operational no more than three years after the bill has been signed into law.
–obtain a performance bond or guaranty prior to the establishment of the facilities "for the benefit of the government of the Virgin Islands."
Jn Baptiste said other portions of the new bill, called the Public Utility Rate Stabilization Act, seek to stabilize electricity rates by putting a two-year freeze on all rate increases once the bill is signed into law.
During the two-year period, WAPA must also decrease the Levelized Energy Adjustment Clause (LEAC) to reflect any drops in the price of fuel. "We want to make sure some sort of savings will be passed onto the ratepayer," Jn Baptiste said. "The bill also states that 5 percent of corporate taxes paid annually by HOVENSA will be deposited into a Public Utility Rate Stabilization Fund, which would be used to offset any losses WAPA may incur as a result of an increase in fuel rates."
According to the bill, the fund would be administered through the Finance Department. However, WAPA would not be able to receive the money unless a release is authorized by the PSC.
The bill also mandates that the government adopt Renewable Energy Portfolio Standards by Oct. 1, 2009. "This means that standards would be developed whereby certain percentages of renewable energy generated by private entities may be purchased by WAPA at a certain price," Jn Baptiste explained. "For example, WAPA would be able to purchase a certain percentage of renewable energy generated by a particular company; that percentage would be different, then, if WAPA is purchasing power from a household or a smaller business."
Jn Baptiste added the bill "shows that the Senate is serious" about stabilizing electricity rates, which are currently an "undue burden placed on ratepayers."
Jn Baptiste is the primary sponsor of the Public Utility Rate Stabilization Act.
When contacted Tuesday evening, Bruno-Vega said WAPA is still reviewing the bill, along with the possible impact it could have on the utility, whose "working cash" is currently $3.5 million "in the red" (See "WAPA Board Struggles with Mounting Debt, Fuel Costs").
"We'll be there at the meeting on Aug. 7 to put our opinion on the record," Bruno-Vega said.
If the bill is signed into law, WAPA would have 30 days to negotiate a small-power agreement and 90 days to submit a contract to the PSC for approval.
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