Aug. 23, 2007 — Public Services Commission members shot down a request Thursday to raise Levelized Energy Adjustment Clause (LEAC) rates again — a move that V.I. Water and Power Authority officials said will cost them an additional $8.9 million in deferred fuel costs.
In denying the request, the PSC also went against recommendations put forth by its own advisors, Georgetown Consulting Group, whose representatives suggested that LEAC electric rates should climb by about 2.1 cents per kilowatt-hour. Though the proposed rate came as the result of a compromise struck between Georgetown and WAPA, the authority's initial request saw the electric LEAC climbing to 21.4693 per kilowatt-hour.
Without the PSC's approval, LEAC rates will stay put until December, holding at 19.2759 cents per kilowatt-hour on the electric side and $7.58 per every thousand gallons of water. The proposed increase in the electric LEAC would have tacked on about another $10 to residents' monthly utility bills.
Surprised by the board's decision, WAPA officials explained that the intent of the rate hike was to help recover a recent increase in deferred fuel costs brought on by fluctuations in world oil prices. Over the past two months, the authority has been paying out more for fuel that it has been able to recoup through the LEAC, explained Nellon Bowry, WAPA's interim executive director.
"In the meantime, WAPA is hemorrhaging cash month after month. Even the proposed 21.4 cent rate does not get us full recovery going forward," he said.
Though PSC members said they were sympathetic to the authority's financial woes, many explained that they were opposed to forcing an extra expense on local residents.
"Businesses are already closing because they can't pay their electric bills," said board member Donald "Ducks" Cole. "And pretty soon, this expense is going to affect our entire economy — things like the gross receipts taxes which are tied to the bonds we've floated. On one hand, I can't sit here knowing that you need money to pay for fuel and run your operations, and not give you the increase you asked for. But in giving it to you, I also know that residents won't be able to pay for things like medicine or food."
Board member Verne C. David suggested that the authority, which is currently footing an $18 million bill for the government, begin looking at "innovative" ways to increase its cash flow — including cutting power to departments and agencies that have continued to defer utility costs.
The PSC board also tabled a request from WAPA to recover through the LEAC about $500,000 used to subsidize the development of a fuel-hedging program for the territory.
Shifting gears, PSC members received an update on the implementation of new environmental and waste water user fees proposed by the V.I. Waste Management Authority. According to representatives from Malcolm Pirnie Inc. — hired by the commission as technical consultants on the matter — work is already under way on a review and evaluation of the proposed fee schedule.
Malcom Pirnie Vice President Raul A. Torres said that the firm hopes to gather all information needed for the project by the end of next month, and plans to complete its analysis by the end of October.
WMA officials have said that if a user fee is implemented by the end of this year, it will begin collecting on the tariff in early January. The commission has the final say on the matter, however, and will have to approve the fee schedule before it can come online.
PSC members also approved a request by local franchise ferry companies to cut in half the number of runs between downtown St. Thomas and St. John over the next few weeks. The new schedule will be in effect between Sept. 6 and the end of October, and will run as follows:
Departing Cruz Bay
— 7:15 a.m. (arriving in Charlotte Amalie at 7:45 a.m.)
— 11:15 a.m. (arriving in Charlotte Amalie at 11:45 a.m.)
— 3:45 p.m. (arriving in Charlotte Amalie at 4:15 p.m.)
Departing Charlotte Amalie
— 9 a.m. (arrive in Cruz Bay at 9:30 a.m.)
— 1 p.m. (arrive in Cruz Bay at 1:30)
— 5:30 p.m. (arrive in Cruz Bay at 6 p.m.)
Transportation Services General Manager Kenrick Augustus said there are fewer passengers traveling the route at this time of year. In the interim, Transportation Services and Varlack Ventures need time to perform routine maintenance on the vessels, he said.
The commission also extended for eight months a temporary ferry schedule for V.I. SeaTrans, which offers service between St. Thomas and St. Croix. The extension is retroactive to May 10, and will expire at the beginning of next year.
PSC board counsel attorney Tanisha Bailey-Roka said another PSC meeting is scheduled for the end of this month to deal with telecommunications. Though the commission had several related items on this week's agenda, scheduling conflicts with the hearing examiner and technical consultant prevented the board from taking any action on the issues, she said.
Present during Thursday's meeting were board members Joseph Boschulte, Cole, David, M. Thomas Jackson, Alecia Wells and Raymond Williams.
Board member Siri Hamad was absent.
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