Aug. 7, 2008 — After meeting for almost six hours Wednesday evening, Public Services Commission members voted on only three items on a packed two-page agenda — and one of their decisions was to postpone voting on a petition for another hike in Levelized Energy Adjustment Clause (LEAC) rates.
The board decided to revisit the issue in 60 days, after they had a chance to look over a report and responses to the report filed by their own consultants and the V.I. Water and Power Authority. Final documents had only come in around 1 p.m. Wednesday, board members said.
WAPA proposed increasing the electric LEAC rate from the current $0.333303 per kilowatt hour to $0.452253 per kilowatt hour — a 32 percent jump for average residential customers, who would have seen their bill increase from $209.29 to $276.28 if WAPA's petition was approved. Commercial customers' bills would have also jumped by 30 percent — from $578.69 to $752.86 per month — while large power users would have been hit with a 33.4 percent increase.
The petition also included a hike in the water LEAC rate from $10.25 per every thousand gallons to $16.22 per every thousand gallons — a 22-percent increase for the average residential customer using 2,400 gallons per month.
In mid-June, the PSC approved a 22.9 percent increase in the electric LEAC and a 14.6 percent increase in the water LEAC rate.
The reason for the second increase, WAPA officials said, is the rising cost of oil, which is going to set the authority back $139.37 per barrel this month.
"The past and continuing failure of the LEAC rate to recover the authority's fuel cost, fully and timely, has caused a significant deterioration in the authority's fiscal and financial position, which has assumed crisis proportions," said Nellon Bowry, WAPA's chief financial officer. "If not addressed now, the authority will be unable to meet its most basic obligations — fuel costs, payroll and debt service — and will become financially insolvent in the very near future, within a few months."
The authority's total revenues for fiscal year 2008 was about $172.3 million; however, WAPA had to pay out $145.4 million to Hovensa for oil, $23.7 million in payroll expenses and $11.3 million for debt service payments on its outstanding bond issues, with "nothing" left for any other expenses, Bowry added.
As of Tuesday, WAPA was working on a cash deficit of $9.5 million, he said.
PSC board members said they had to balance the authority's need for cash with what consumers can afford.
"My issue is that based on the last increase in the LEAC rates, it seems that the consumer base here in the territory might be at that point where one more piece of straw is gon' break it," said board chairman Joseph Boschulte.
Residents testifying during Wednesday's meeting made it clear they were already struggling to pay their utility bills at the current rates.
"If you all approve this increase, it could be perceived as suicide," said St. Thomas resident Clarence Payne. "Businesses are folding — it's becoming prohibitive to conduct business in probably the most beautiful region in the Western hemisphere, and that's a travesty. And we're not just talking about the billionaires here — we're talking about the little people, the medium people and the big people."
The decision to postpone voting on the increase was unanimous, with board members Boschulte, Donald "Ducks" Cole, Verne C. David, M. Thomas Jackson and Alecia Wells voting in favor. Board member Sirri Hamad was absent.
The board also approved changes to another petition that would allow WAPA to purchase water from a third-party supplier. The changes allow WAPA to purchase water at a cost lower than or equal to its water production costs (See "PSC Turns Down WAPA Request on Paying 3rd Party for Water.")
Wrapping up the meeting, board members said that hearings for WAPA's petition for an emergency water rate increase would be held on Sept. 11 and 12.
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