Sept. 22, 2006 — A bill attempting to stabilize power rates in the territory will "doom us all," Alberto Bruno-Vega, executive director of the V.I. Water and Power Authority, told senators during a Government Operations and Consumer Protection meeting Friday.
Called the Public Utility Rate Stabilization Act, the bill incorporates many provisions included in last year's Jobs Creation Act, and also proposes that the utility freeze, for at least two years, any increases in the Levelized Energy Adjustment Clause (LEAC).
Since the bill was introduced in early August by Sen. Norman Jn Baptiste, Bruno-Vega has consistently said the proposal would put WAPA in trouble with its bondholders and push the utility into bankruptcy by forcing it to pay for increases in fuel costs without being able to implement a corresponding increase in the LEAC (See "Stabilized Energy Rates Debated in Committee Hearing").
Bruno-Vega made similar statements during Friday's meeting and told senators that the bill, in its present form, is "a killer."
He said that in August WAPA had submitted a list of recommendations to Jn Baptiste about how the bill could be changed. Specifically, Bruno-Vega said, the original bill should be broken down into two separate bills — one that deals with rate stabilization, and another that deals with job creation and finding alternate energy sources.
The first bill proposed by WAPA would create a Public Utility Rate Stabilization Fund, consisting of money appropriated by the Legislature, along with 5 percent of corporate taxes paid annually by Hovensa.
The fund, which is also included in Jn Baptiste's bill, is meant to help offset losses incurred by WAPA as a result of the freeze on LEAC increases. However, the major difference between the two bills is that WAPA's proposal allows for an increase in the LEAC rate in the event of a funding shortfall.
The second bill proposed by WAPA, entitled the "Public Energy Diversification Act of 2006," also maintains several provisions laid out in the bill proposed by Jn Baptiste — such as pursuing alternate energy sources, negotiating a power purchase agreement with a small power provider and creating job opportunities for V.I. residents.
The significant change, however, is that WAPA's proposal states that the utility will conduct a search for small power producers that only generate the types of energy recommended in a recent assessment conducted by the U.S. Department of the Interior (See "452-Page Territorial Energy Assessment Released").
According to the utility's proposed bill, those types of energy are limited to: solar power, wind power, petroleum coke, solid waste/sewage treatment bio-gas, bio-fuel, coal and ocean thermal.
While Bruno-Vega explained that WAPA is currently "in discussions" with Hovensa regarding the development of a petroleum coke/coal burning plant on St. Croix's south shore, he added that the utility would prefer to focus on solar power and ocean thermal energy technologies (OTEC).
However, Bruno-Vega told senators that the federal government would first have develop OTEC technology before it could be introduced in the Virgin Islands.
"These two types of energy would be the best for the Caribbean," he said, adding that residents should be encouraged to reduce their dependence on WAPA by using solar energy.
While senators did not discuss in detail WAPA's new proposals, or the current bill proposed by Jn Baptiste, they did express concern over the number of LEAC increases implemented over the past year. "We want to give the public some assurance that the rates will stabilize, especially those persons on fixed incomes," Sen. Ronald E. Russell said.
Bruno-Vega explained that while residents will be seeing an approximately $11 decrease in their WAPA bills in October, there is no way to guarantee whether the price of oil will stay constant, decrease or increase.
However, he suggested that the government contribute funds to help the utility set up waste-heat steam recovery boilers on both St. Thomas and St. Croix — which he said would result in significant savings for both WAPA and its customers.
To put WAPA in a better financial position — according to WAPA's Chief Financial Officer Nellon Bowry, the utility's capital budget for fiscal year 2007 was $54 million "in the red" — Bruno-Vega also suggested that the government help subsidize the utility's deferred maintenance costs.
At the end of almost two hours of debate, the bill was held in committee, until WAPA officials have a chance to meet with Jn Baptiste and other senators about the proposed changes.
Present during the first half of Friday's meeting were Sens. Roosevelt C. David, Adlah "Foncie" Donastorg, Terrence "Positive" Nelson and Russell, along with noncommittee member Sen. Liston Davis.
Sens. Craig W. Barshinger and Shawn-Michael Malone were absent.
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