April 16, 2007 — A bill designed to give the V.I. Water and Power Authority some much-needed financial help cleared the Senate's Rules and Judiciary Committee Monday, despite a flurry of opposition from the Public Services Commission.
The bill, as it was first introduced early last month, has three significant sections, which: a) reduce certain fees the utility pays annually to the PSC; b) appropriates $200,000 from the commission's annual assessment fees to cover the cost of an interconnection feasibility study; and c) mandates that small power producers and co-generation facilities absorb all application and certification costs associated with becoming a qualified power producer.
Under current V.I. law, to sell energy to WAPA a private company must apply and meet qualifications as determined by the PSC. Officials assess the company’s viability to supply power and hold administrative hearings, all at a cost to WAPA.
The bill, sponsored by Sens. Shawn-Michael Malone and Liston Davis, would allow WAPA to pass those costs directly on to the applicant, saving considerable expense. (See "New Legislation Could Provide WAPA Much-Needed Financial Help.")
During Monday's meeting, however, PSC General Counsel Tanisha Bailey-Roka said that all cost reductions would hurt the commission, which uses the money to fund its day-to-day operations.
Therefore, she said, expenses — such as a small power producer's application and certification costs — should be equitably distributed between WAPA and the other interested party. The PSC should have discretion over that distribution, she added.
Bailey-Roka also argued extensively against another section of the bill, which takes projected revenues from the Levelized Energy Adjustment Clause (LEAC) out of the funds WAPA pays to the PSC on an annual basis.
Currently, each local utility has to pay the PSC a percentage of its annual gross revenues, which ultimately fund the commission's operating costs. In WAPA's case, this includes money recovered through the LEAC. Rather than covering the PSC's assessed fees, the money instead goes directly to Hovensa to cover fuel expenses, according to WAPA Executive Director Alberto Bruno-Vega.
"We must note, ironically, that the payment of the PSC's annual assessment comes from the base revenues of the authority and not from the fuel-related LEAC charges," Bruno-Vega wrote in a statement read into the record during Monday's meeting.
Over the years, WAPA's payments to the commission have steadily increased, jumping from $396,652 in the 2003 fiscal year to about $727,000 in March 2007, WAPA representatives said.
However, assessment costs have continued to increase for other utilities as well, Bailey-Roka said — and will continue to jump if the Senate allows WAPA to pull projected LEAC revenues out of the mix.
"This represents about $200,000 that will be taken from the PSC's budget," she said. "And that money is going to have to be passed onto the other utilities. Fuel has also risen for the ferries, but they're not before the Senate asking for special treatment."
Local ferry companies have not included fuel costs in their assessed-revenue calculations, noted Sen. James Weber III. "WAPA is the only entity that does this, so I can't really buy that argument," he told Bailey-Roka.
PSC representatives also opposed another section of the bill that takes an additional $200,000 from the commission's annual assessment fees to conduct a feasibility study on the merits of connecting the electrical systems of St. Thomas and St. Croix.
To quell the opposition, senators approved an amendment to the bill appropriating money for the study from the General Fund.
"We're really asking for the PSC's cooperation on this," Malone said before the amendment was introduced. "I understand the concerns, but you need to be a team player — the time has come for us to get behind our utility and give it the freedom to do more with the money it generates."
Voting in favor of the bill were Sens. Carlton "Ital" Dowe, Malone, Weber, Carmen M. Wesselhoft and Alvin L. Williams. Sen. Usie R. Richards voted against the bill, and Sen. Celestino A. White Sr. was absent at voting time.
Senators also approved one bill appropriating $250,000 from the General Fund to WAPA to conduct a pilot solar-powered street-lighting program on St. Croix, and another bill mandating that four percent of delinquent property taxes collected on each island go into the respective district's street lighting and potable water accounts.
The full Senate body will have an opportunity to cast a final vote on the bills during this week's full legislative session.
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