March 6, 2009 — In a brief emergency hearing Friday, Public Services Commission members gave a unanimous thumbs-up to another reduction in Levelized Energy Adjustment Clause (LEAC) rates, to go into effect at the beginning of next month.
The V.I. Water and Power Authority's petition pushes the electric LEAC down from the current $0.211661 per kilowatt hour to $0.159464 per kilowatt hour. The bill for the average residential customer would drop by 17.6 percent, from $148 to $122, while average commercial customers would see a 16.1 percent decrease, taking their monthly bills from $421 to $353. Large power customers using more than 40,000 kilowatt hours will see an 18.6 percent decrease, which would drop the power bill from $11,199 to $9,111.
The water LEAC will drop about 8 percent — from $5.81 per every 1,000 gallons to $5.33.
"The reduction is less because at the urging of your consultants, part of the charges for WAPA's fuel hedging program is going to be put toward the water side," WAPA Executive Director Hugo Hodge Jr. told commission members Friday. "That was what was agreed upon by both parties."
Over the past few months, WAPA's numbers have continued to reflect a decline in world oil prices.
"As long as we stay in a recession, the price of oil will likely stay where it is," Hodge said. "So it's a double-edged sword: We're in a recession, but there are some benefits, like the low price of oil."
Had the commission already approved WAPA's recent petition to reinstate the automatic LEAC — which is triggered when the price per barrel of fuel rises or falls by $1.75 — residents would be feeling the savings this month, Hodge said later in the meeting.
Meanwhile, WAPA is back on its regular 30-day payment schedule with Hovensa. When WAPA's debt to the refinery hit about $40 million last August, Hovensa demanded that the authority pay for fuel deliveries two days in advance and said interest on the debt would continue to build until it had been paid in full.
But WAPA's cash flow situation has continued to improve, according to officials. In addition to receiving upwards of $17 million from the government as payment for past due utility bills, WAPA also secured a $40 million line of credit last year to help pay off its bill to Hovensa.
But the $40 million loan has raised concerns from at least one bond rating agency, according to WAPA Chief Financial Officer Nellon Bowry. Last year, Standard and Poor's cut its outlook on WAPA's BBB- investment rating from stable to negative.
"We had a visit last week from a Fitch analyst, and out of that is going to come a decision about what they're going to do with regards to this matter," Bowry told PSC members Friday. "They were concerned about our liquidity position and the fact that we had to borrow $40 million to pay Hovensa.
"WAPA still has to submit some documentation, and in a month or two, they will make a decision. Since WAPA is on negative watch, there are really two options: They can remove the watch and let us keep our rating, or they could lower our rating."
Friday's meeting lasted about an hour. Board members present were Joseph Boschulte, David, Sirri Hamad, M. Thomas Jackson, Elsie Thomas-Trotman and ex-officio member Sen. Patrick Simeon Sprauve.
Back Talk
Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.
