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PSC Doesn’t Act on Base Rate Increase, Sends Matter Back to Hearing Examiner

After four hours of back and forth, the Public Services Commission didn’t vote to reinstate the interim base rates it took away from the V.I. Water and Power Authority last month, but instead moved the matter back to a hearing examiner for further recommendations.

The PSC first approved the interim base rate increase in early January, but voted two weeks later to rescind it 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 has said was acted on after only three days’ notice and with little time for the authority to review.

The PSC’s decision on Jan. 26 to rescind the increase also came after an hour-long discussion between both sides over a different petition for reconsideration filed by WAPA, during which some commission members 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.

Two days later, WAPA board members looked at the immediate impacts of the PSC’s decision, which Rhymer said would most immediately hurt the authority’s ability to produce reliable power. Among other things, the increase was going toward the leasing 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.

Rhymer said then that he would also be meeting with his legal team to discuss any other impacts or options and, a few days after, WAPA announced that it would be filing a motion for reconsideration with the PSC that would allow WAPA to implement the base rate increase on Feb. 1.

If the PSC doesn’t act on WAPA’s petition within 30 days, the matter is considered denied, and while meeting on St. Thomas on Wednesday, two of the commission’s members tried to resolve the issue by pushing for reconsideration.

“WAPA needs an interim base rate,” PSC chair Andrew Rutnik said. “It was negotiated down to $14.5 million when WAPA had asked for 40 million, and that is not getting the whole apple. It’s getting a bite of it. They have met most of the conditions of the agreement are or very close in negotiations on the other items, but all of what they’re doing is for the utility to provide the service necessary for people.”

Rutnik added that other issues that have come up during the discussions, such as the PSC’s jurisdiction, should be separated from the argument and sent to a hearing examiner for resolution.

“WAPA needs a PSC that is willing to stand up, recognize what they willing to do and how they are willing to do it,” Rutnik added. “I don’t agree with WAPA’s approach but I have eliminated that from my thinking.”

Commission member Raymond Williams also made a motion to reinstate the interim increase and expedite hearings that would decide on a final rate. The motion, however, failed, as commission members Johan Clendinen and David Hughes voiced their opposition over WAPA’s “defiance” of the PSC’s order and the utility’s inability to “show substantial proof” that they have met the “preconditions” that would allow for the interim rates to go into effect.

While Rutnik said pushing the matter back could cause “irreparable damage” as WAPA works to stabilize its power and put in place new generating equipment, Hughes and Clendinen said that giving it back to the hearing examiner would allow both sides to start from the beginning and resolve “this mess.” Hughes said that getting a hearing examiner involved would also resolve WAPA’s concerns over the lack of an evidentiary hearing, which the utility says by law should have been conducted before the PSC decided to rescind the interim rates.

Despite Rutnik’s attempts to explain that an interim base rate could be put in place while a hearing examiner looks at final rates, Hughes made a motion not to act on WAPA’s petition but to instead refer the base rate portion of the case back to the hearing examiner and include in the discussion a new plan for “rate flow” that would determine how future increases are made.

Voting in favor of that motion were Clendinen, Hughes and Williams. Rutnik voted against it.

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