July 31, 2002 – The Water and Power Authority board voted at a special meeting on Wednesday to seek Public Services Commission approval of an increase in its base electric rate to customers that would yield a net gain of about 3.3 percent in revenues.
As another means of generating income, it plans to issue $50 million in bonds early next year, according to a WAPA release.
The request to the PSC will be for an increase of 11.4 percent in the base rate, but the net impact after a proposed reduction of the current Levelized Energy Adjustment Clause surcharge will be an increase of some 3.3 percent, the release stated.
The last general base-rate increase took effect in 1994, it said, and the last increase of any kind was an emergency rate hike in 1996 as a result of Hurricane Marilyn.
"Since that time, the authority's costs have outpaced the revenues from the rate structure," the release stated. And if the increase is not approved, it said, "the authority anticipates reducing staff and eliminating necessary projects for maintenance and upgrade."
Additional revenues are essential in order for WAPA to fund the territory's street lighting operations — transferred late last year to the authority from the Public Works Department — and capital projects, the release said.
"We have a duty to provide the service, but there must be sound funding to support the effort," Glenn Rothgeb, acting WAPA executive director, said. "The only reliable funding source is a customer surcharge."
Joseph R. Thomas Jr., who served as executive director for a year before being asked to resign in April, had been of the same opinion. He said looking to yearly legislative appropriations was too unreliable. WAPA established a separate company to handle the street lighting.
The Legislature appropriated $2.8 million for the lighting start-up costs but the executive branch has yet to release any of the money, WAPA officials have said.
Rothgeb said the capital projects are needed in order to "improve the reliability of power." Among the critical needs, he said, are extension of underground lines from Henry E. Rohlsen Airport to Frederiksted on St. Croix and from the Rehelio Hatchett Substation in Long Bay to the East End on St. Thomas, and the building of a substation on St. John.
At its July 19 meeting, the PSC voted to let WAPA's current asbestos abatement surcharge expire on Aug. 2. It extended the Hurricane Marilyn emergency mitigation and recovery surcharge, which also was scheduled to end on Aug. 2, until Sept. 30, with plans to address the matter again at the board's September meeting.
PSC members were not happy that Rothgeb waited until the 11th hour to seek an extension of the two expiring surcharges. But he said revenues from the two temporary surcharges are tied to the utility's bond holdings. Cutting off those sources of revenue, he said, would throw the authority into default on its bond retirement, and the result would be that "the bondholders will own WAPA."
Now, the release said, WAPA proposes "eliminating existing surcharges by rolling them into the base rate."
The utility still will press for a separate surcharge for street lighting, however. It already has a petition before the PSC seeking approval to assess residential electricity customers an average of about $1.50 a month to cover the costs of maintaining and improving the territory's street lighting system. The actual charge would be based on kilowatt usage, the release stated.
Carol Burke, WAPA board chair, said on Wednesday that no one has complained to her about a $1.50 charge for street lighting. "To the contrary, people say they want street lights, and a minimal surcharge … is more than worth it," she said.
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