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WAPA Fights to Raise Rates Regardless Of PSC Vote

The Virgin Islands Water and Power Authority on Tuesday petitioned the Public Services Commission to reconsider its decision of December 12 in which it lowered the fuel surcharge, known commonly as the LEAC, did not take any action on the base rate petition, and allowed the lease generation surcharge to expire at the end of this year. Currently, USVI residents pay 43 cents per kilowatt-hour, and now WAPA is threatening to increase the bill to 57 cents per kilowatt-hour.

WAPA said that as a result of the PSC’s action, the Authority will be unable to meet its payment obligations to its LPG fuel supplier, VITOL and will be unable to purchase the lower cost propane fuel. WAPA will be forced to utilize the more expensive No. 2 fuel oil to generate electricity in the territory.

The petition notes that, “On reconsideration, the LEAC for the period January 1 to June 30 must be based on the cost of No. 2 oil” which will increase the LEAC by approximately 20 cents per kilowatt hour. The increase will enable WAPA to purchase diesel fuel in order to operate the two power plants continuously. “The failure to receive reconsideration of this rate will mean the Authority will be unable to purchase sufficient fuel for its generating needs.”

On December 12, 2019, the PSC voted to:

• Lower the LEAC by approximately 3 cents per kilowatt-hour;

• Take no action on a base rate petition pending before the commission that would have resulted in no change to ratepayer’s overall bills;

• Allow the leased generation surcharge authorization to expire at the end of 2019.

The Power Authority continues to state that LEAC must now be based on the fact that propane fuel will not be available as a less expensive fuel supply, and instead, the Authority must purchase No. 2 oil in order to operate its generating units. On 100% oil, WAPA will not be operating its most efficient units to generate power. “Instead of a projected decline in the LEAC, for the first six months of 2020, the fuel surcharge must now be based on the cost of No. 2 oil which will increase the LEAC.” When the increased LEAC is added to the current base rate, residential customers will face an overall cost of approximately 57 cents per kilowatt-hour.

WAPA’s reconsideration petition notes that the Authority is very mindful of the hardship that a significantly increased LEAC will impose on ratepayers at this time. However, unless the LEAC is increased, the Authority will not be able to supply electric power in the territory on a continuous basis. This will result in power outages.

Alternatively, the Authority offered that the commission could grant WAPA a temporary surcharge equal to $29.7 million, based on the PSC hearing examiner’s recent report. This would equate to 5.7 cents per kilowatt-hour. This surcharge would need to remain in place until the PSC acts favorably on the permanent base rate petition now before it for consideration. This would result in an overall residential cost of approximately 43 cents per kilowatt-hour.

The Authority claims that this is the only way that the Power Authority. Virgin Islanders already can’t afford the current rates, which is one of the highest in the modern world. This plea comes after a public hearing in Oct. 2019 in which the financial history and spending of WAPA were deemed incredibly inadequate. With executive salaries combined to make of 2 million dollars. Now WAPA is asking more like demanding an ultimatum in which Virgin Islanders once again have to pay for a company’s mismanagement of funding. Happy Holidays.