The V.I. Public Services Commission approved a roughly 3 percent increase in the base rate portion of water customers’ bills Tuesday, recognizing the V.I. Water and Power Authority has achieved PSC milestones toward adding more efficient reverse osmosis water to the system.
For residential customers, the base has gone up from $17.50 per initial thousand gallons to $18.16. The rate for commercial accounts and residential amounts beyond the first thousand gallons goes from $19.94 to $20.6 per thousand gallons.
That amounts to a roughly $2.16 increase for the average household using 2,400 gallons per month, according to Larry Gawlik of Georgetown Consultants, which advises the PSC on technical issues.
The new base rate more closely reflects WAPA’s actual costs of maintaining its plants and producing drinking water. The increase should generate roughly an additional $1 million per month for the utility. The PSC previously decided to condition WAPA’s requested increase on its progress toward contracting for new, more efficient reverse osmosis water production. WAPA Executive Director Hugo Hodge Jr. said WAPA’s governing board approved a vendor in May and WAPA is negotiating with reverse osmosis provider Seven Seas.
"Our objective is to get contracts as fast as possible and get RO [reverse osmosis] online," Hodge said. "It allows us a lot more flexibility in how we operate."
Once in place, the reverse osmosis production should allow reductions in the LEAC fuel charges, Hodge said.
PSC members Verne David, M. Thomas Jackson, Joseph Boschulte and Donald Cole voted yea on the water base rate increase. Elsie Thomas-Trotman voted nay and Sirri Hamad was absent. All the other votes Tuesday were without dissent.
The PSC also voted to keep unchanged the current Levelized Energy Adjustment Clause (LEAC) fuel surcharge on water bills. From Oct. 1 through the end of the year, the water LEAC will continue to be $10.04 per thousand gallons.
Over on the electric side, WAPA had asked the current LEAC be continued one month while the utility finalizes renegotiating the loans it took out to pay for the fuel the utility has already purchased, but whose cost is being collected over time from electric system customers’ LEAC payments. The authority is refinancing its existing $40 million electric system general obligation note, for which the current balance is $26 million.
Pushing the total back up to $40 million would yield $14 million in new money, which could then be used to replenish WAPA’s Self-Insurance and Hazard Mitigation Fund and cover close to $3 million worth of damage from Hurricane Earl, according to WAPA Chief Financial Officer Nellon Bowry. WAPA requested a decrease for November and December.
The PSC voted instead to reduce the LEAC immediately. The PSC voted to slightly decrease the LEAC from the current $0.251 per kWh down to $0.24843 per kWh for the period from Oct. 1 through the end of the year.
LEAC rates may go down again early next year, Hodge said, because the utility is performing long-overdue major overhauls of some very large generating units.
"As other units are repaired, you would see an increase in efficiency which will be reflected in the LEAC as well," Hodge said, estimating possible reductions of four to 5 percent from whatever rate is dictated by fuel prices at the time.
