Oct. 13, 2006 — A lack of proper documentation prevented the Public Services Commission from taking action Friday on the implementation of a fuel-hedging program for the territory.
While V.I. Water and Power Authority representatives, along with members of Georgetown Consultants (the PSC's advisors on WAPA matters), said they had resolved prior issues and were "almost" ready to "present a package" to the commission, PSC board members said they could not act on any recommendations without "all the information."
According to WAPA representatives, the fuel-hedging program is intended to stabilize fuel costs that affect the price of electricity and water for customers (See "WAPA Board Approves Fuel Hedge Plan"). Acting on a fuel-hedging plan at this time would be advantageous since fuel rates are "currently edging down," Nellon Bowry, WAPA's chief financial officer, said.
However, board members voted to table the issue until the package was finalized and distributed to the commission for review.
In discussing a separate issue, representatives from Georgetown Consultants used the current drop in fuel rates to justify a decrease in the Levelized Energy Adjustment Clause (LEAC).
While the LEAC was recently adjusted downward on the electric side to $.215619 per kilowatt hour, Georgetown's Jamshed K. Madan said LEAC rates for November and December should reflect the current price of fuel, resulting in a lower LEAC rate of $.214956.
He said that when setting the LEAC, WAPA "generally" fixes the rate for a six-month period, instead of the proposed three months. "For the months projected, WAPA did not keep the price constant but increased it slightly for the remaining two months," Madan said. "Since the world's oil prices seem to be decreasing further, we recommend using the most recent price of oil."
Madan's suggestion was contested by Glenn Rothgeb, WAPA's chief operating officer, who said that WAPA's proposed electric LEAC rate was initially based on a per-barrel cost of $65.93.
"What we're actually paying now is $69.90 per barrel," he said. "Including shipping, that's $71.65. If we were to use protocol, we would, in November, be coming in with the same price we were using two months ago. That would wipe out the decrease we're suggesting."
WAPA Executive Director Alberto Bruno-Vega added that WAPA wanted to immediately pass along the "significant decrease" in fuel price to the customers. "We should be maintaining the LEAC factor for a period of six months, and we generally do that," he said. "But we saw it appropriate, due to the reduction in fuel prices, to pass the savings on to the customers immediately instead of in January."
PSC members voted to maintain the electric LEAC at WAPA's proposed rate of $.21569 during the next two months.
In keeping with the idea of passing savings onto customers, Madan and Georgetown's Larry Gawlick discussed how the utility is progressing with: installing a waste heat recovery boiler on St. Croix; conducting a condition-assessment study to review the efficiency of WAPA plant equipment; and implementing programs to reduce line losses.
"We recommended that an analysis take place on a monthly basis to determine whether WAPA is on track with programs to reduce fuel and base rates," Madan said. "The issue of line losses, after showing some improvement, has now increased on the electric side 1 percent over last year's amount, while water has increased 3 percent from last year. On the electric side, that's costing ratepayers about $5 million annually."
Madan suggested that WAPA and PSC officials "get together" and fund the programs through the LEAC, since line-loss programs continue "unabated."
"It would be irresponsible not to take any action," he said.
At the end of the meeting, Gawlick gave a brief presentation on the purchase of the waste heat recovery boiler, which was recently authorized by WAPA's governing board. He said the utility is close to finalizing an agreement with Nooter/Eriksen, an independent supplier of waste heat recovery boilers located on the mainland (See "Major Purchase Sends WAPA Back to the Bond Market").
Present during Friday's PSC meeting were Joseph Boschulte, Donald "Ducks" Cole, M. Thomas Jackson, Verne C. David, Raymond Williams and PSC chair Alecia Wells.
Board member Sirri Hamad was absent.
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