Aug. 26, 2003 – On the heels of Innovative Telephone's recently approved 17 percent increase in customer charges will be an emergency 15.2 increase in water bills if the Public Services Commission grants a request the Water and Power Authority says it will submit this week.
What's more, WAPA intends the emergency 15.2 percent increase to be followed shortly by another of 9.3 percent, Alberto Bruno-Vega, executive director, said on Monday. That would make a total, permanent raise in potable water rates of 24.5 percent.
While that's distressing news for residential and commercial consumers, the water increase — like the phone rate hike — it could be a devastating blow to the territory's largest consumer: the V.I. government.
According to Bruno-Vega, the increases are necessary to meet the utility's minimum debt service needs — to meet principal and interest payments on borrowing. He said failure to get approval for the emergency rate increase could result in the water system being placed in receivership by WAPA's bond trustees.
Bruno-Vega broke the news on Monday at a special WAPA board meeting, asking the board to approve going to the PSC for the rate hikes. In preparing the authority's Fiscal Year 2004 budget, he said, he discovered figures on the FY 2003 water system operating budget indicating that a non-recurring payment in lieu of taxes of $1.7 million was included, and that the allocation of fringe benefits from the electric system to the water system was omitted.
These adjustments have placed the water system in non-compliance with its bond agreements, Bruno-Vega said. He said his projected figures showed WAPA experiencing FY 2004 losses in excess of $2 million. The overall 24.5 percent rate increase would change that figure to a gain of $3.6 million, he said.
Bruno-Vega said he will immediately seek the PSC approval of the emergency rate increase of 15.2 while at the same time pursuing the total 24.5 increase.
The 15.2 percent increase will "at least cure the violation," he said, and the additional 9.3 percent is necessary to sustain the debt service on a $17 million bond the authority plans to borrow for several capital projects in both districts next year.
Water rates have not gone up since 1994, Bruno-Vega noted. The average residential consumer now pays $57.46 for consumption of 3,400 gallons of water per month. The 15.2 percent increase would add $8.73 to that bill, bringing the total to $66.19.
One chronic impediment to WAPA's operations is the huge debt owed WAPA by V.I. government agencies and instrumentalities for both electricity and water. At the moment, that total debt is nearly $10 million. The largest amounts owed, according figures from an Aug. 12 Public Services Commission meeting are:
– Juan F. Luis Hospital, $2.5 million.
– Public Works Department, $1.4 million.
– Education Department, $1.2 million.
– V.I. Housing Authority, $400,000.
– VIHA, $2.9 million.
– Housing Parks and Recreation Department, $700,000.
– Luis Hospital, $560,000.
– Housing Finance Authority, $300,000.
Bruno-Vega said WAPA is a "priority" vendor to the government, and that, "based on the loans the government is getting," he believes the utility will be near the top of the list for payment when $100 million of the borrowing materializes. Of the $235 million in bond money the Legislature authorized the government to borrow, $100 million is earmarked for income-tax refunds and vendor payments. (See "Approval of bond bill ends long day's debate".)
The government, although behind in payments, has been "making a significant effort to keep current," Bruno-Vega said.
Sen. Adlah "Foncie" Donastorg said in a release distributed on Monday that the government could be paying $700,000 more for its phone service as a result of the recently approved Innovative Telephone rate increases. "Based on projections for Fiscal Year 2004, government agencies anticipated paying just over $4 million for phone service," he said. "Rate hikes estimated at 17 percent bring that figure up $700,000 to $4.7 million."
However, those figures apparently did not take into consideration that much of the government's phone costs are for long distance, which would not be affected by the Innovative increases.
WAPA projects planned with bond money
At Monday's meeting, the board approved a FY 2004 capital budget of $78.2 million — $53.3 million for the electrical system and $24.9 for the water system. It also authorized sending out a request for proposals to increase the authority's line of credit to $30 million from the current $20 million.
Bruno-Vega told the board that the planned $17 million capital projects bond issue will finance "system improvements in large communities" on St. Thomas and St. Croix.
St. Croix the projects include:
– A 10 million-gallon water storage tank at Orange Grove.
– Water-line extensions to the Sunny Isle and Barren Spot communities.
– A master meter program to detect water-line loss and diversion, something WAPA has been trying to put into operation for years.
St. Thomas the projects include:
– A water tank on the East End.
– Water extensions to Frydenhoj, upper Altona and upper Anna's Retreat communities.
At Monday's meeting, the WAPA board also approved seven projects:
– Preliminary engineering and design of additional waste heat boilers for the Richmond power plant by Harris Group, not to exceed $161,290.
– A Unit 13 steam turbine control system retrofit contract with General Electric International, for $37,821.
– A Thomasville water distribution project contract with E.D. Plumbing, for $368,259.
– An emergency and supplemental contract for the Randolph E. Harley, Richmond and St. John power plants with Best Construction, for $900,000.
– A three-year contract for boiler chemical additives and engineering services to Ashland Specialty Chemical, Drew Industrial Division, for $1.7 million.
– A 2002 emission fee payment to the Planning and Natural Resources Department. – The purchase of seven vehicles from Caribbean Auto Mart for $65,964 and three from Metro Motors for $52,950.
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