May 29, 2008 — Faced with a Water and Power Authority request for an increase to its fuel surcharge, the Public Services Commission says it will hold hearings before July 1 and asks the public to give comment before it renders a decision.
On May 16, WAPA submitted a request for rate increases to be effective for all bills issued on or after July 1, according to a statement issued Tuesday by the PSC. The Water and Power Authority has to give the PSC its forecast for oil prices and consumption twice a year. Any request to change the fuel surcharge — or Levelized Energy Adjustment Charge — has to come six weeks before it goes into effect.
WAPA requested an increase in the electric system LEAC of $0.136059 per kWh from the present level of $0.254733 to $0.390792 per kilowatt/hour (kWh), according to the PSC. This would result in residential electric rates in excess of $0.46 per kWh, and higher charges for business-rate customers, the PSC says.
WAPA is also seeking an increase in the water system LEAC of $7.32 per 1,000 gallons (Kgal) from the current $7.58 per 1,000 gallons to $14.90. The requested increase would raise the cost to a resident for 1,000 gallons of water to $29.80 per 1,000 gallons.
The WAPA governing board plans to discuss the LEAC increase Thursday afternoon at its regular meeting.
"The commission is concerned about the effect of the escalating rates for water and power on the public and the Virgin Islands' economy," says a public statement issued by the PSC. "Although WAPA remains entirely oil-fired and is subject to the dramatic rise in the price of oil, that has increased significantly over the past six months, from approximately $90 a barrel to more than $130 a barrel today, that problem has been a growing concern for several years.
"There are, however, many factors which contribute to the increasing rates; among them are (1) the cost of oil, (2) efficiency of the equipment and systems, (3) appropriate dispatch, and (4) effective planning. WAPA's ability to provide reliable and efficient service to the territory has been and remains an area of great concern to the PSC, and the events of the last week on St. Thomas only heighten that concern."
Since WAPA generates electricity with oil-fired generators, it must purchase oil at market prices or it cannot generate electricity. There is no money to purchase the needed oil other than what WAPA collects from ratepayers.
Adding to the plan, the LEAC-increase request comes on top of a recent base rate-increase request. (See "PSC Puts Off Vote on WAPA Base Rate Hike.")
The LEAC passes straight from ratepayers through WAPA to the Hovensa refinery to purchase fuel. The base rate gives WAPA the funds to run its own operations and perform repair and maintenance work.
Exacerbating WAPA's financial woes are millions of dollars in overdue government utility bills. In its public statement, the PSC calls on the executive and legislative branches of the V.I. Government to work with WAPA to pay off its outstanding debts: "The commission is acutely aware of the impact that this burden places on the authority, which must make adjustments to operate without the benefit of this significant source of revenue, and the ratepayers who are suffering reduced or unreliable services."
The date and location of the hearing is yet to be announced.
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