Dec. 6, 2007 — With more than $8 million owed to WAPA from inactive private accounts, the authority says it may be forced to turn to current commercial customers and increase its safety net by boosting initial electricity deposits.
The problem, WAPA officials say, is inactive accounts — private customers and private businesses that terminated their accounts and still have balances owed. According to WAPA Acting CFO Maurice Sebastian, as of September, inactive accounts equaled $4,827,906 on St. Croix and $3,361,735 on St. Thomas-St. John-Water Island, for a grand total of $8,189,641. Because WAPA's monthly balance report does not break out the inactive electric from the water accounts, the figures represent both electric and water debts, Sebastian said.
The question is, how do private and commercial customers rack up such an enormous debt?
Cassandra Dunn, WAPA spokesperson, explained the method the authority uses before interrupting service. All customers are billed on a month-to-month basis and have 20 days to pay before a delinquent notice — which gives another 10 days grace — is sent. By then the next month's bill is issued. If the customer has intentions of leaving the island, closing their business or relocating to another address where electricity may be included in the rent, they rarely inform WAPA, and the final bill stays in the system.
"Our only protection is the customer deposit," Sebastian said.
The Public Services Commission authorized the authority to charge residential customers a $100 deposit before initiating service. For commercial establishments, the deposit is normally twice the amount of its monthly billing. "This is our security," Sebastian said. However, because of the rise in fuel costs, most deposits no longer cover the amount of the final bill, he said.
"These outstanding balances could go back as far as five or six years, and are written off by a certain percentage each year," Dunn said. "Unpaid accounts still remain as obligations on WAPA books, which we continue to try to collect. While attempts are made to collect these balances, customers may have left the island and cannot be traced. If they try to open another WAPA account for another location at a future time, then they are required to settle the outstanding accounts first."
Debt Collection
But how strongly does WAPA pursue these outstanding balances?
As for private individuals who have abandoned their final bill and possibly relocated to the States or other locations, WAPA admits they are not doing all they can to recover these debts.
"We are not as actively involved in going to small-claims court as we should be," Sebastian said. "That is something we can improve."
WAPA points to personnel shortages as one of the reasons these outstanding debts are not pursued.
"We may need additional staffing in that area," Sebastian said.
Commercial customers may soon have to offset this situation by increasing the deposit they already have on the books to more accurately reflect their current electric bills.
"With commercial customers there is more at stake," Sebastian said.
When the parent company of the Pueblo supermarkets filed for Chapter 11 in August, it owed the authority nearly $142,000. (See "Pueblo Parent Company Files Bankruptcy, Leaves V.I. Suppliers in the Lurch.") A similar story was played out with the closure of Paradise Gyms on St. Thomas and St. Croix.
How can a business pile up such a large debt?
Sebastian insists that business accounts are treated the same as residential customers. "When they don't pay their bill, they get cut off," he said.
"If (a business) does not have special circumstances, you have to get disconnected," Sebastian said. "Unless someone's not disconnecting, and I don't want to go down that road."
WAPA considers a business's payment history in determining whether it gets disconnected for non-payment, Dunn said.
"They could go on a payment plan … but they have to pay something," she said. "You have to bring in the human factor and be business-friendly."
However, WAPA officials insist the customer deposit is the crux of the situation.
"The deposit," Sebastian said, "is the safety net to recoup money from businesses that close … If they decide they are not going to pay the final bill, we could be left holding the bag. We have to have a strategy to slowly infuse additional deposits to the commercial customer."
An Unpopular Plan
This proposed strategy does not sit well with current commercial customers.
One business owner on St. Croix — who did not want to revel his name in fear of reprisals — said when he opened his business three years ago, his electric cost was between $450 and $480 a month and his deposit was less than $400. Today his bill is between $825 to $875 — almost double what it used to be. What does he think about the possibility of WAPA asking for a deposit increase?
"That's nonsense," he said. "I completely disagree."
Sarah Close, owner of the St. John Inn on St. John, said her electric bill for this year is $10,000 more than she paid last year. She bought the business four years ago. Her 12-room inn is very conscious of electricity use, Close said.
"When guests check out, we turn off the air conditioning," she said. "And if the room is unoccupied for several days, we unplug the refrigerator."
Close said her monthly bill is approximately $3,000 and her deposit at WAPA is $1,5000. The proposed strategy "punishes the people who are paying on time," she said. She continued, "We are being made to pay for them."
Dunn reminded customers that they accumulate interest on their deposits when they maintain a WAPA account, and that interest can be used to pay their bill.
"At the beginning of each year, the amount of interest in the deposit account is noted on each customer's bill, in the gray box at the bottom, and is available for their use anytime" Dunn said. "At four and a quarter percent, your deposit is one of the best investments in town."
In addition to the debt owed for inactive accounts, WAPA currently has $18 million in outstanding government receivables, which includes $4.6 million owed for the purchase and maintenance of streetlights throughout the territory.
The inactive account debts have been presented at budget hearings, Sebastian said.
"It's not something we have been hiding … (but) the interest has always been on the government debt," he said.
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