April 3, 2008 — Much to the chagrin of V.I. Water and Power Authority officials, the Public Services Commission board rejected on Thursday a petition allowing WAPA to adjust the Levelized Energy Adjustment Clause (LEAC) rate should the utility have to purchase water through a third-party provider.
One of St. Croix's water desalinization units is scheduled to be taken out of service in September for a four-month overhaul, WAPA Executive Director Hugo Hodge Jr. said during a PSC meeting held on St. Thomas. To keep the utility from having to ration water on the big island during that time, WAPA proposed to enter into a one-year water purchase contract with a third-party supplier for the establishment of a reverse osmosis (RO) unit at the Richmond Power Plant– the cost of which would be recouped through the water LEAC, he added.
"On St. Croix, the unit right now is being held together by duct tape and bandages," Hodge said. "It can go down anytime. If nothing is in place in the event that it goes down, we're going to have to be rationing water on St. Croix. There's also a storage problem — we have nothing to go to when the unit goes down."
The proposed contract rate stands at $8.75 per every 1,000 gallons of water — an agreement that is inclusive of all capital, integration, electricity and startup costs, according to Georgetown Consulting Group principal Larry Gawlick, advisor to the PSC board on WAPA matters.
WAPA officials said the proposed purchase agreement would result in a savings of about $2.57 per every 1,000 gallons.
However, Gawlick suggested making sure that repairing the water desalinization unit would be cost-effective. He also noted that the petition has not yet been approved by WAPA's governing board and might be better discussed during an upcoming PSC base-rate investigation.
Despite actions taken Wednesday by WAPA board members, Hodge said earlier in the meeting that he anticipates board approval on a base rate hike by the end of the month.
PSC board members Joseph Boschulte, Donald "Ducks" Cole and Sirri Hamad agreed with Gawlick's assessment and voted down the petition. Board member M. Thomas Jackson abstained, while members Alecia Wells and Verne David were absent.
In other action, the board voted to send the Federal Communications Commission a copy of their comments on a federal joint board proposal to cap the amount of Universal Service Funds distributed to eligible telecommunications carriers. FCC's joint board recommended the cap be in place for a year while the commission works to restructure the USF system, according to PSC attorney Boyd Sprehn.
The Universal Service Fund is an FCC-regulated program designed to bring low cost telecommunications services to rural areas. Sprehn said that if the Virgin Islands are not exempted from the cap, the territory's eligible telecommunications carriers would not have access to the money needed to upgrade their services.
WAPA officials also discussed:
— extending the June 30 deadline for WAPA to meet certain benchmarks set up to reduce line-losses on the electric side (see "WAPA Pushed to Meet Standards for Energy Waste, Rates");
— the 18 companies pre-qualified to bid on selling non-oil based power to WAPA (See "WAPA OKs 18 Companies for Alternative Energy Bid");
— the $101.50 per barrel cost of oil.
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