Oct. 2, 2008 — Everyone's electric bills will go down starting immediately because the V.I. Water and Power Authority requested a reduction in the fuel cost surcharge and the V.I. Public Services Commission voted to backdate the reduction to Oct. 1.
WAPA Executive Director Hugo Hodge Jr., presented the PSC Thursday with a plan to reduce the levelized energy-adjustment clause (LEAC) fuel surcharge on both water and electric bills. For water, the LEAC component of the bill will be $13.72 per thousand gallons, down from $16.41. The electricity LEAC goes to 0.322317 cents per kilowatt hour (kWh), down from .413951 cents. This is a 21.5 percent reduction in the electric LEAC, which, taken together with the base rate and other components of the bill, amounts to an 18 percent cut in the average total electric bill.
"Would you have a problem if the commission accepts this today and reduces the LEAC effective today?" PSC Commissioner Donald "Ducks" Cole asked Hodge.
"Our intent is to see relief immediately," Hodge said. "Bills have not gone out yet. We can rerun the bills from last night and reflect this increase as of Oct. 1. … We only put Nov. 1 because we are required to give 30 days' notice but you have the authority to change it earlier."
Making the reduction right away is possible partly because oil prices have fallen from their peak, Hodge said. But equally important, the Legislature and Gov. John deJongh Jr. recently increased WAPA's legal debt ceiling by $150 million up to $500 million, he said. As a result, WAPA is in a position to secure a $40 million line of credit from First Bank Virgin Islands to help pay Hovensa $48 million due for fuel purchased earlier this year. The balance of $8 million would be taken from the $17.5 million that WAPA received last Friday from the Government of the Virgin Islands to pay on its past due bills. (See: http://www.onepaper.com/stcroixvi/?v=d&i=&s=News:Local&p=1222833692 V.I. Coughs Up $17.5M for Debts to WAPA) Without the $40 million line of credit, WAPA would pay Hovensa out of the LEAC revenues over the next 12 months. By paying the line of credit over three years, instead of paying for the cost of the oil in one year, WAPA can lower the LEAC.
Because WAPA owed so much, Hovensa changed the terms for delivering oil from payment within thirty days to payment 48 hours in advance. (See "Hovensa Demands WAPA Pay In Advance for Fuel")
"Now, with the government paid in full and with the line of credit we will be able to return to normal ," Hodge said. "Once this is approved by the PSC and the loan is closed, we will go ahead and pay off Hovensa," Hodge said. "Then we can return to normal. We are still paying in advance for fuel which is quite tricky. Paying them off will get us back to paying net 30 days, so things will improve. … We will be able to do more things to make the utility operate better."
The PSC voted without dissent to approve the LEAC reduction, making it retroactive to Oct. 1. Voting yea were: Cole, Chairman Joseph Boschulte, M. Thomas Jackson, Verne C. David and Alecia M. Wells. Sirri Hamad was present for most of the discussion but had to leave and was absent for the vote.
Upon hearing of the reduction, deJongh praised the PSC and WAPA for moving promptly.
"This will provide some immediate relief to Virgin Islands residents and business owners," deJongh said Thursday evening. "But it is only the first step in a multi-pronged approach to developing a comprehensive energy strategy. Right now, reducing the LEAC will make the cost of electricity more affordable and allow residents to spend a bit of their hard-earned money on more than just their electrical bill each month."
In other business, the PSC appointed St. Thomas attorney Kathleen Mackay as hearing examiner to look into WAPA's recent request for an increase in the water base rate. (See: "WAPA Wants 11-Percent Increase in Water Rates")
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