June 14, 2005 – With increasing utility rates generating concern throughout the territory, the Public Services Commission gave its approval Tuesday to another 5 percent rise in the water LEAC rates for the next six months, bringing the figure to $2.67 per month.
The water LEAC the levelized energy adjustment charge — is based on a formula that passes on to customers part of the fuel costs incurred in producing water, explained Alberto Bruno-Vega, the executive director of the V.I. Water and Power Authority.
"This is due in large part to the fact that fuel prices have been increasing in the last couple of months," Bruno-Vega said. He added that WAPA had initially wanted a 6.3 percent increase, but had come to a lower rate as a compromise with PSC technical staff and Georgetown Consultants, which advises the commission.
The PSC additionally approved the maintenance of the current electric LEAC, which stays at $.146635.
The PSC also capped any increases to the LEAC portion of a consumer's monthly bill at 5 percent. For households that use over 500 kilowatt hours per month, however, any increase over that 5 percent will be recouped over the next six months. Bruno-Vega explained that the goal was to "soften the blow to the consumer."
Bruno-Vega said he hoped the PSC would continue the current formula of calculating the LEAC when the commission considers whether to keep it in October. "I hope that they do reconsider it," Bruno-Vega said, "I definitely think that it will continue to be beneficial."
When many PSC board members initially related stories of their own high fuel bills, Bruno-Vega responded by stating that, "right now, WAPA is down in the hole . We're bursting at the seams. There is already a $20 million debt between electric and water billing. This money is needed for us to continue to provide service to the community."
WAPA's chief financial officer noted that oil prices are beyond the utility's control, based on the world oil markets and other costs, such as shipping and inventory prices. Ultimately, the consumer will see higher rates if the fuel price rises.
This fact led to another discussion about WAPA's long-term efforts to keep utility rates down: the search for fuel sources other than oil. Bruno-Vega acknowledged that WAPA needs to find alternative sources of power for the territory in the future.
One such source could be West Indies Power Ltd., which recently submitted a proposal to the PSC under the auspices of the Small Power and Cogeneration Act of 1984. That act allows small power generators to sell their excess energy to the main utility — in this case, WAPA if the cost is lower than what WAPA would incur generating the power itself.
WIP has proposed running a cable to St. Croix from a geothermal facility on the island of Saba. While legal counsel for the PSC strongly disapproves of the method, WIP says that it is logistically and economically feasible. Deliberation on the proposal was postponed to a later date to allow WIP officials to outline their plans more fully.
Although WAPA does have the facilities to generate power on St. Croix for the next 10 years, Bruno-Vega said, the utility is trying to acquire an alternative source to decrease the costs to consumers. WAPA is now formulating proposals with three companies on St. Croix that are certified under the PSC to provide non-fuel-driven alternatives: Caribe Waste Technology, St. Croix Renaissance, and Caribbean Energy Resources. These companies are being considered for short-term contracts with WAPA for providing service.
Bids are also being entertained for St. Thomas, although all of the companies certified by the PSC so far are on St. Croix. Bruno-Vega said, "St. Thomas will be taken care of, too. We're just looking for the best rate." Due to recent litigation, WAPA's review of these potential power sources has been halted until certain matters are legally resolved.
In other business, WAPA petitioned the PSC to increase the Self Insurance and Hazard Mitigation Surcharge on consumer bills by .002 percent to provide a fund in case of damages made to the electrical system. "We needed to have insurance because FEMA couldn't provide funding for every hurricane," Bruno-Vega said. "This is an attempt for us to provide funding to initiate a recovery period."
WAPA further petitioned that the PSC approve an increase in monies being taken from the fund to complete underground cables in Charlotte Amalie and Christiansted. "We have $6.7 million collected in the fund from the surcharge already," Bruno-Vega said, "but the PSC has to give us the authority to use it. The $4 million will be distributed evenly between Charlotte Amalie and Christiansted in order to pay for the underground lines."
Additionally, WAPA presented the PSC with a petition for a loan of $3.5 million to increase the integrity of its fuel tanks. The goal is to ensure that the territory has enough fuel in case a barge cannot deliver. As a result, consumers will receive an additional $1 charge on their bills a month to avoid disruptions in the event of a hurricane.
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