A motion for reconsideration filed with the Public Services Commission on Tuesday has opened up the door for the V.I. Water and Power Authority to implement its 13.2 percent interim base rate increase starting Wednesday.
The PSC first approved the interim base rate increase in early January, but voted last week to rescind its vote 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, which WAPA Executive Director Julio Rhymer said was acted on after only three days’ notice and with little time for the authority to review.
The PSC’s decision last Thursday also came after an hour-long back and forth between both sides over a different 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 certain recommendations that came out of a management audit conducted in 2014.
At the Thursday 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 been working with either side since the dispute started, according to PSC attorney Boyd Sprehn.
Meanwhile, WAPA board members convened mid-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 leasing of two additional units – Unit 25, already 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.
Rhymer said after the Saturday board meeting that he would be meeting with his legal team to discuss any other impacts or options and it appears that’s exactly what he did. A Tuesday announcement from the utility says that WAPA has filed a motion for the PSC to reconsider its vote, and that motion has “lawfully” allowed WAPA to implement the interim base rate increase beginning Wednesday.
“Due to the potential impact on the territory, and after consideration of the substantial and irreparable financial harm that would be inflicted on the authority due to the unlawful action taken by the PSC, WAPA has made the difficult decision to implement the interim base rate increase, effective Feb. 1, 2017. The rate increase was approved by the PSC on January 12,” Rhymer said in the Tuesday announcement.
WAPA’s release said that local law requires the PSC to provide WAPA with 10 days’ notice on any decision.
“In the filing, WAPA took note that the PSC action was taken without notice to the authority. Additionally, the commission members did not discuss or provide any explanation for their actions.
It is clear from the record that the sole reason the PSC rescinded the rates was in retaliation; WAPA contends that the PSC’s action in rescinding the interim base rate on Thursday was both arbitrary and capricious, and most importantly, not supported by law,” according to the statement.
The PSC’s decision also lowered Levelized Energy Adjustment clause rates and moved one infrastructure surcharge from the LEAC to the base rate, resulting in slight increase – about $7 — for customers using an average of 250 kilowatts. The approximately 13 percent interim base rate affects those customers using more than 250 kilowatts and raises their bills about $16.20 per month.
Rhymer said in his Tuesday statement, “WAPA’s decision to file for the reconsideration of the PSC action came after much consideration. It is necessary to prevent or at least delay the catastrophic and long-lasting ill effects of the PSC’s vote on not only WAPA but, to a greater extent, on the community who rightfully expects basic electric and potable water service.”
In a press release also distributed Tuesday, PSC Executive Director Donald “Ducks” Cole said the commission’s decision was meant to make WAPA more accountable.
“The core of the current dispute is that WAPA has not been accountable for the way it has spent the monies that it receives from ratepayers, and has clearly sought to continue avoiding accountability,” Cole said. “As a result of old plants, with poor efficiency, ratepayers have paid hundreds of millions of dollars in excessive fuel costs. They are real costs, but they have been unnecessary, because more efficient equipment has been available.”
Cole added that some of the consequences WAPA has outlined, specifically rolling blackouts caused by inefficient generating units, are “not true.”
Cole said, “WAPA is now threatening blackouts because it claims it is forced to cancel a new emergency leased unit, and to terminate the ‘temporary’ generator, Unit 25, that has been here since 2012. Neither is true.”
“Not only is the funding for Unit 25 continuing in current WAPA rates, but the very existence of that unit was at the insistence of the Public Services Commission,” according to Cole.
Cole said the PSC has been reviewing WAPA’s current rates for the past year.
By December 2016, the “PSC worked with WAPA to develop a plan going forward that we could both support and which we could trust would be implemented,” Cole said, adding that the authority was “to move forward with acquiring new generation for the entire territory, beginning with three new smaller units that would operate with vastly improved efficiency – burning just half the fuel of WAPA’s current plants, and further lowering the LEAC.”
“In addition, another temporary plant was to be brought in to St. Thomas, to permit removal of more of the old equipment, and to provide efficient and reliable power in the transition,” Cole said, adding that WAPA didn’t stick to the plan.
He said, “WAPA decided that it was more important to preserve its right to act unfettered. The very next day after the commission approved a reduction in the LEAC, and two rate increases in the base rates totaling nearly $47M per year, WAPA filed petitions for reconsideration challenging the ability of the commission to make sure that the funds actually buy the new services agreed upon.”
“The commission cannot, in good conscience, continue to authorize WAPA to collect funds for improvements to its system, and then see the monies diverted and improvements not made,” Cole said.