Jan. 25, 2003 – The Water and Power Authority is going to ask the Public Services Commission to grant two surcharge requests that would mean increases in customers' electric bills, one because its own billings to the Public Works Department have gone unpaid and the other because increases in oil prices over the last half of 2002 left it with a multimillion-dollar shortfall.
The utility is asking for a temporary surcharge on customers' electric bills as a means of recouping the $1.2 million in outstanding debt from Public Works.
WAPA's executive director, Alberto Bruno Vega, said on Friday that initially, Public Works offered to pay the bills. "But I have spoken to them, and they admitted that they have no funding for that," he said, "and we [WAPA] can't pay for that."
Public Works previously had responsibility for installing and maintaining the territory's street lights. The V.I. government reassigned that responsibility to WAPA as of Jan. 1 of last year but never delivered on funding of $2.8 million appropriated to cover start-up costs.
The WAPA governing board on Thursday voted to ask the PSC for the temporary surcharge to cover its losses from the $1.2 million in outstanding billings to Public Works from Jan. 1, 2002, to the end of Fiscal Year 2002 last Sept. 30.
Last fall, the PSC granted the authority an emergency surcharge effective Sept. 30, which has paid for street lighting operations since then.
That surcharge increased the bill of a typical residential customer using 500 kilowatt-hours of electricity a month by $1.45. The new surcharge, which WAPA would like to see in effect March 1, would raise that typical customer's monthly bill by about 85 cents a month more.
The proposed new surcharge will cover only the costs of maintaining existing street lights, Bruno said. "New requests are not being taken care of," he said. "I hate to put WAPA on the spot, but that's the way it is."
Bruno urged residents to conserve energy as a means of lowering their electric bills.
For example, by using fluorescent light bulbs instead of "regular," or incandescent, bulbs, he said, "in the beginning, you'll pay a slightly higher price, but it will pay back immediately over several months." For the same intensity of illumination, he said, fluorescent bulbs last about five times longer and consume one-fifth the electricity of regular bulbs.
Increase in LEAC surcharge also being sought
Conservation could be the key to keeping bills down for WAPA customers, as the utility also plans to ask the PSC for an 8.2 percent increase in its levelized energy-adjustment clause, or LEAC, surcharge to offset dramatic fluctuations in the price of fuel.
The petition to the PSC for the LEAC increase is based on speculated oil prices for the next six months. If the price goes up, WAPA can raise the rate; if the price goes down, WAPA can reimburse customers by lowering the rate.
Bruno said the looming war with Iraq and the ongoing general strike in Venezuela are making for a jumpy world oil market. "In these uncertain times, when fuel prices fluctuate so dramatically, somebody in the Mideast makes a statement, and the price spikes up. Things cool down, and the price comes down," he said. "Under these circumstances, it's difficult to maintain the prices of the LEAC."
He said that WAPA has accumulated a shortfall of $4.5 million since July because it has been paying much higher prices for oil than the current LEAC surcharge covers. Over the next six months, "if the LEAC were to remain the same, we would not recoup another $2.5 million more — that's $7 million," he said.
In fact, WAPA wants the new fuel surcharge to be imposed for 12 months, rather than the usual six. The utility will monitor fuel prices carefully, Bruno said. "If oil spikes in one month, we'll ask for an increase; if it goes down, we'll go to the PSC so we can give a credit," he said.
Turning again to that typical residential customer using 500 kilowatt-hours a month, he said, a monthly bill of about $78 now would go up to $84. To calculate their own approximate increase, assuming usage remains constant, he said, customers should multiply their current bill by 1.082 to see the impact of the requested LEAC increase.
Funds shifted to comply with 1998 bond issue
In other business on Thursday, the WAPA board approved payment of $2.8 million to the utility's 1998 bond fund to reimburse money expended to purchase what is commonly called the Devcon property on St. Croix, adjacent to the Richmond power plant.
Bruno said the money will come from "internally generated" funds slated for capital projects. To be in compliance with the bond issue, he said, the payment will consist of $2.5 million taken out to make the purchase plus $300,000 in interest.
The Devcon property, eight acres previously owned by V.I. Cement and Building Products, a Devcon subsidiary, was purchased by WAPA officials for $2.5 million in January 2000. The board is in the midst of an investigation of the acquisition, which was made without board approval, although no expenditure of more than $75,000 is allowed without such approval.
The money will soon be redirected to fund several capital projects, including an expansion of the Sunny Isle office and an upgrade of leased office space on St. John. "It's like taking money from one pocket and putting it into another, so then we'll be in compliance," Bruno said.
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