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LEAC Electric Rates to Climb Nearly 10 Percent

While the Public Services Commission granted the V.I. Water and Power Authority’s latest request to increase Levelized Energy Adjustment Clause (LEAC) rates, WAPA’s Executive Director Hugo Hodge said Tuesday that he hopes the next time he’s in front of the board will be for a reduction.

Starting July 1, the electric LEAC will increase by 9.9 percent for the average residential customer using 500 kilowatt hours, or an additional $20.66. The rate was recommended by the PSC’s consultants, Georgetown Consulting Group, who found that fuel costs were higher than what WAPA originally filed for.

"The way the process works is that you file 45 days before the actual LEAC period, which is about 30 or 40 days before a meeting like this takes place and during that time, the prices on the market change," Hodge said after the meeting. "So there has been an increase in the price of oil since we filed."

WAPA had initially requested an increase to 0.359, while Georgetown recommended a LEAC factor of 0.360, which was approved by the PSC Tuesday. The commission also approved an increase in the water LEAC from $9.87 per thousand gallons to $14.33.

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Board members took time during the meeting to express their concerns. While some, such as Elsie Thomas-Trotman, were concerned that no one is looking out for the consumers and that WAPA "just keeps coming back" asking for money; others, such as Sirri Hamad, were more concerned about WAPA’s plant maintenance and efficiency.

Hamad said the LEAC is in part tied to maintenance, since less-efficient machines burn more oil and drive up costs. But Hodge said the problem is that most of the parts needed to fix WAPA’s generators have to be shipped in. If WAPA personnel had ready access to the parts, they could make quick repairs, but delays in shipping have often stretched out the process, he said.

Hodge also said that government debts, such as the $10 million owed for operating street lights, is costing WAPA about $1 million a month that could be put toward maintenance.

In its analysis of WAPA’s LEAC filing, Georgetown recommended that the PSC find a way to help WAPA get funds to purchase another generator.

In his motion to approve the new LEAC rates, PSC member Verne David asked that WAPA provide with future filings schedules of activities that are taking place to increase efficiency and reliability levels, quarterly reports on WAPA’s current fuel diversification plan and updates on its hedging program.

Hodge said after the meeting that if prices on the market keep trending downward, then he could soon be coming back for a reduction.

Attending Tuesday’s meeting were PSC board members Donald Cole, David, Hamad, Jackson and Trotman.

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While the Public Services Commission granted the V.I. Water and Power Authority's latest request to increase Levelized Energy Adjustment Clause (LEAC) rates, WAPA's Executive Director Hugo Hodge said Tuesday that he hopes the next time he's in front of the board will be for a reduction.

Starting July 1, the electric LEAC will increase by 9.9 percent for the average residential customer using 500 kilowatt hours, or an additional $20.66. The rate was recommended by the PSC's consultants, Georgetown Consulting Group, who found that fuel costs were higher than what WAPA originally filed for.

"The way the process works is that you file 45 days before the actual LEAC period, which is about 30 or 40 days before a meeting like this takes place and during that time, the prices on the market change," Hodge said after the meeting. "So there has been an increase in the price of oil since we filed."

WAPA had initially requested an increase to 0.359, while Georgetown recommended a LEAC factor of 0.360, which was approved by the PSC Tuesday. The commission also approved an increase in the water LEAC from $9.87 per thousand gallons to $14.33.

Board members took time during the meeting to express their concerns. While some, such as Elsie Thomas-Trotman, were concerned that no one is looking out for the consumers and that WAPA "just keeps coming back" asking for money; others, such as Sirri Hamad, were more concerned about WAPA's plant maintenance and efficiency.

Hamad said the LEAC is in part tied to maintenance, since less-efficient machines burn more oil and drive up costs. But Hodge said the problem is that most of the parts needed to fix WAPA's generators have to be shipped in. If WAPA personnel had ready access to the parts, they could make quick repairs, but delays in shipping have often stretched out the process, he said.

Hodge also said that government debts, such as the $10 million owed for operating street lights, is costing WAPA about $1 million a month that could be put toward maintenance.

In its analysis of WAPA's LEAC filing, Georgetown recommended that the PSC find a way to help WAPA get funds to purchase another generator.

In his motion to approve the new LEAC rates, PSC member Verne David asked that WAPA provide with future filings schedules of activities that are taking place to increase efficiency and reliability levels, quarterly reports on WAPA's current fuel diversification plan and updates on its hedging program.

Hodge said after the meeting that if prices on the market keep trending downward, then he could soon be coming back for a reduction.

Attending Tuesday's meeting were PSC board members Donald Cole, David, Hamad, Jackson and Trotman.