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Charlotte Amalie
Wednesday, November 25, 2020
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PSC Board Approves LEAC Decrease

During a lengthy meeting Monday night, the Public Services Commission approved a drop in electric and water Levelized Energy Adjustment Clause rates and heard arguments on a petition that could once again allow the V.I. Water and Power Authority to recoup its deferred fuel costs through the LEAC once its conversion to propane is complete.

In May, WAPA put in for a decrease in the electric LEAC, which would change the July to September rate from .4018 cents per kilowatt hour to .4005, bringing the average residential bill down from $210.36 to $209.83.

WAPA also petitioned for a decrease in the water LEAC, from $10.85 per thousand gallons to $9.12. WAPA representatives said Monday the authority has been using less fuel on its water side due to a more efficient reverse osmosis system and is able to pass those savings on to consumers.

It took less than two minutes Monday for the PSC to approve the petition for LEAC decreases, but commission members were tied up for at least 20 minutes on another WAPA petition that would allow the authority to recoup its deferred fuel balance either through the base rates or through the LEAC.

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It was initially recommended by Georgetown Consulting Group, the PSC’s advisors on WAPA matters, that WAPA switch to recovering those costs through the base rate, but according to the authority’s attorney, Samuel Hall Jr., Georgetown recently changed its mind again and WAPA has been left dangling.

During the most recent base case hearing, it was recommended that the cost be factored into the LEAC, but since January, that has been opposed by Georgetown and never implemented, Hall added Monday.

“It has to be recovered some place,” Hall said. “We have have gone from LEAC to base rate to LEAC, and now we’re at the point where we ask you to reconsider. This is not a random cost, this is a legitimate cost and it is about $10.2 million a year to the authority.”

PSC attorney Boyd Sprehn countered that both sides are at odds over the figures, with Georgetown calculating a balance of approximately $6.9 million that is left to be recovered after a series of refinancings and bond issues.

Sprehn explained that the deferred fuel balance is what the authority pays for fuel in excess of what it had forecast to pay and, generally, the PSC has allowed WAPA to recoup the costs through the LEAC six to 12 months after it has accrued.

WAPA’s January to March 2014 filing anticipated $33 million in excess fuel costs, but Sprehn said that was attributed to a “price difference issue” instead of a fuel consumption issue. He also said that WAPA’s petition did not take into account how much of the deferred fuel balance had already been recovered through both the LEAC and base rates.

Hall said that Monday night was the first time WAPA had heard from the PSC on the issue and, going along with Hall’s recommendations, the PSC gave both sides some time to review the information and respond.

Hall said WAPA’s petition was also looking to recover approximately $6.7 million in deferred fuel costs and, if it goes through, WAPA would recoup the funds after it switches over to propane, which would lower the cost for the consumer.

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