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PSC Changes LEAC Structure, Drops Electric Rate for July to December

After hours of arguing, making motions, approving amendments and ordering clarifications, the Public Services Commission voted Tuesday night to drop the electric Levelized Energy Adjustment Clause (LEAC) rate from the current $.279991 to $0.191321 per kilowatt hour beginning Wednesday.

The original motion to drop the rate had the electric LEAC at $.209321 for July, then at the final $0.191321 beginning Aug. 1, after the rate financing mechanism – a small maintenance surcharge included in the LEAC – was transferred to the base rate at the request of the V.I. Water and Power Authority.

Objections by WAPA Executive Director Hugo Hodge Jr. about changing the rate twice prompted the PSC to amend the motion and change the transfer date of the RFM to July, which would also increase base rates in each category by 1.8-cents per kilowatt hour.

At meetings in December and January, the PSC voted to remove that portion of the RFM that would have allowed WAPA to bring on an independent agency (IAC) to monitor the day-to-day operations of the utility. At the meeting in November, WAPA officials testified that proposals received from companies that could do the job were too expensive and what had so far been collected was not enough to cover the cost.

Based on additional recommendations from Georgetown Consulting Group, the PSC’s advisors on WAPA issues, the commission voted in January to further reduce the RFM so that it took away funds that are collected to cover WAPA’s maintenance and spare parts costs, which the authority has said is needed to keep its plants operating at an efficient level.

Commission members said they found the RFM had “exceeded its useful life” and was no longer needed as an emergency charge, but said WAPA could seek to cover the costs through the base rate, which the PSC temporarily approved Tuesday.

The changes are in effect until the end of December, but WAPA must file a new base rate case before Dec. 1, the commission ruled.

Another provision in the original motion sought to eliminate the LEAC altogether, until WAPA could come up to date with its PSC assessment payment. WAPA was asked to make three equal monthly payments, with the first payment scheduled within the next 20 days, but after objections from WAPA attorney Marie Thomas-Griffith, the PSC amended the motion to send the assessments on to the Attorney General’s Office for further action if WAPA doesn’t begin to pay.

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