A decision by the Public Services Commission Thursday to rescind an interim base-rate increase for the V.I. Water and Power Authority will have “catastrophic” effects for the territory, including rolling blackouts on St. Thomas-St. John, which could be felt as early as Wednesday if nothing changes, officials said Saturday.
WAPA’s emergency weekend meeting on St. Thomas came two days after the PSC voted to rescind the approximately 13 percent increase, which it had already approved in December. The increases were meant to give WAPA more working capital to purchase more efficient generators, among other things.
But PSC members voted Thursday to rescind the increase after WAPA said it needed more time to go over the other items included in an interim base rate agreement negotiated between the two parties. WAPA Executive Director Julio Rhymer said the agreement was acted on after only three days’ notice and with little time for the authority to review it.
The PSC’s decision also came after an hourlong back and forth between both sides over a petition for reconsideration filed by WAPA, which some commission members said dealt with the PSC’s jurisdiction to hire a specific consulting firm to evaluate whether WAPA had put in place recommendations that came out of a 2014 management audit conducted.
At Thursday’s meeting, WAPA said its issue was not with the PSC’s jurisdiction but the fact that it hired the same consulting firm for the evaluation as WAPA had hired to conduct the audit. The firm, Vantage Energy, has not worked with either side since the dispute started, according to PSC attorney Boyd Sprehn.
WAPA board members convened Saturday morning to look at the immediate impacts of the PSC’s decision, which Rhymer said would most immediately impact the authority’s ability to produce reliable power. Among other things, the increase was going toward the lease of two additional units – Unit 25, which is on island, and Unit 26, which is on its way to the territory – that were meant to increase reliability and give WAPA a chance to overhaul and convert Unit 23, which Rhymer said is two years overdue for maintenance.
Without the increase, Rhymer said WAPA could be in breach of contract for both leases beginning Feb. 1, but would have to over the details with his legal team to confirm. Meanwhile, if Unit 25 is taken off line, the authority on St. Thomas-St. John would only have Units 18, 14, 15 and 23, but Rhymer said 23 still only runs on fuel oil, which would cost the authority more in the long-run and possibly lead to a rate hike that would be felt by customers territorywide.
Case in point, the weekend’s power outages on St. Thomas occurred after Unit 18 tripped, which Rhymer said could become common if only the less reliable units are handling the work.
“It’s important to remember that the authority, working hand in glove with the PSC, has developed a long-term energy production plan, developed a short-term interim plan, and came to a point where we can go forward," WAPA board member Gerald Groner said Saturday. "These two things do something critical. St. Thomas has had frequent rolling blackouts and is in danger of having more blackouts, unless we can use the interim generation plan that we agreed on, and the long-term plan to deal with the critically important aspect of the authority, which is to produce electricity more efficiently.”
Rhymer added that the authority will not be able to fully take St. Thomas-St. John over to liquefied propane gas (LPG) without the rate increase. Meanwhile, without money to pay for fuel oil, St. Croix’s Unit 19 will also no longer be functional, Rhymer said.
“Units 16 and 20 will burn LPG, however, any malfunction of or maintenance required on either of those units will mean a shortage of generation capacity,” Rhymer explained. “Without capacity to meet peak power demand, St. Croix could face rotating power outages as well.”
Officials said the increase translated into approximately $14.5 million annually for the authority, which also gave WAPA the money it needed to cover its yearly debt service. News of the PSC’s decision has already reached the bond markets and raises additional questions for bond holders and financing agencies, Rhymer said.
Board members attending Saturday’s meeting were: Elizabeth Armstrong, Noel Loftus, Juanita Young, Devin Carrington and Gustav James, Marvin Pickering, Cheryl Boynes-Jackson and Groner.