Residents won’t see an increase in electricity or water rates for at least a couple of months after action by the Public Services Commission Tuesday. However, the discussion indicated that rates might go up before they head down.
The water rate decision for the commission was straightforward. The Water and Power Authority did not make its deadline for offering a rate change for next year. Andy Smith, the authority’s CEO, said that WAPA’s administrators were so busy ensuring there would be enough diesel fuel to keep the lights on in the territory after Vitol said it was stopping delivery of propane that a water rate study “slipped through the cracks.”
Commission member Raymond Williams questioned what would happen if the commission just set the rates lower than they were. After Smith went over some of WAPA’s problems, Commission Chair David Hughes said lowering the water rates would just make the problems worse. The commission decided to adopt the current water rates until March 1, by which time the authority is expected to make a rate case.
The commission also adopted the current LEAC rate of 22 cents per kWh for the next six months.
However, Hughes said this was not going to be enough to recover what WAPA was spending on fuel. He cited three reasons why the fuel recovery costs were inadequate.
First, he said WAPA was charging a nickel a kilowatt hour less than it should. Second, he said the heat calculations the authority used were flawed, assuming that the authority was burning fuel more efficiently than it is.
The third reason has been plaguing the authority for decades: line loss. Line loss results from many items and, loss of electricity in transmission as the term implies, is probably not the biggest cause of much electricity being produced but not being paid for. Line loss can come from illegal hook-ups, people not being billed, or people not paying their bills. The line loss calculated for the sake of LEAC is 8.7 percent; actual line loss is around 13 percent.
And electricity is not as bad as water loss. Smith said water loss on St. Croix approaches 40 percent. Commissioner Andrew Rudnick said that was incomprehensible. He said it would be cheaper to hire water trucks to deliver the water.
However, it would not save the authority any money if it did drastically cut back on its water losses, it is in a contract with Seven Seas to buy a certain amount of water monthly whether it is needed or not.
The commission also discussed proposed solar and wind projects. Rudnick said that he was confident the authority was moving in the right direction to get projects that had been “neglected” online. Smith said with improvements in efficiency and the addition of alternative energy sources, the direction of rates “will be down.” He added that the authority was “very close to efficient generation on St. Thomas.”
When the commission got to the section of its agenda covering ferry services, Hughes noted that although those operating out of Red Hook are regulated by the PSC, a service operating out of Charlotte Amalie is not.
One of the Red Hook ferry services also has service out of Charlotte Amalie. Hughes asked whether it still wanted to offer service out of Charlotte Amalie and whether it was unfair to have a competitor that was not regulated. Delrise Varlack of Varlack Ventures responded that her company did want to continue to offer the service from Charlotte Amalie, and if the PSC did not regulate that line it would give her more options to respond to the market.
At the end of the meeting, Hughes was elected by members to chair the commission for the upcoming year. He told members he would be stepping down from the chairmanship on July 1.