May 4, 2004 – Because of the rising cost of oil on the world market, Virgin Islanders will soon see another increase in their electric bills.
The Public Services Commission on Tuesday approved an increase in the Water and Power Authority's monthly surcharge under the levelized energy adjustment clause — although not as much as the utility's chief executive officer wanted.
The new surcharge of 10.5 cents per kilowatt-hour — an increase of 1.5 cents per KwH — takes effect immediately and applies to both residential and commercial customers.
The LEAC surcharge, which is based on the price WAPA has been paying for fuel, is recalculated every six months. The authority had been requesting the increase since last December.
Alberto Bruno-Vega, WAPA's executive director and CEO, told the commission that the authority's cost for the fuel it buys from the Hovensa refinery has risen by 20 percent since last July. WAPA is now paying $36.71 per barrel, he said, up from $30.59 10 months ago.
Bruno-Vega requested a 23.1 percent increase in the surcharge — to 11.1 cents per KwH hour from the current 9.03 cents. "What we are requesting of you today is lower than the fuel cost of today," he said.
He said "sharp increases in fuel costs" have resulted for WAPA in the "under-recovery" of approximately $14.8 million in fuel costs. With the LEAC surcharge increase, he said, the authority would be able to recoup its current losses in 25 months.
However, oil industry analysts are saying costs will continue to rise. Crude for June delivery increased 83 cents to $38.21 a barrel Monday on the New York Mercantile Exchange — the highest price in 14 years. National news reports on Tuesday cited growing fear among traders of escalating terrorists attacks against the oil industry in the Middle East that could potentially disrupt supplies.
Jamshed Madan, a technical consultant to the PSC for WAPA, recommended that the commission grant the utility a lesser increase in the surcharge, to 10.5 cents per KwH.
"WAPA isn't telling the public that its line losses are costing them $3 million each year," Madan said.
Bruno-Vega's reply was: "We know the line losses are high, but we are doing the best that we can as far as that is concerned."
WAPA is currently experiencing power losses of 17 percent on St. Croix and 8 percent in the St. Thomas-St. John district, he said, due to both technical reasons and line theft.
PSC member Verne David moved to accept Madan's recommended increase in the surcharge. Alric Simmonds amended the motion to require that WAPA submit a schedule of its plans to reduce line losses over the next three to five years. The amendment was approved on a 5-1 vote with Valencio Jackson, commission chair, opposed. The amended motion then passed 4-2 with Jackson and Desmond Maynard voting in the negative.
WAPA has 31 days in which to submit its schedule for reducing the line losses; it if fails to do so, the LEAC surcharge increase will be revoked.
The authority also was told that it owes the commission $117,000 in new docket specific assessments.
Commission members present were Jerris Browne, David, Jackson, Maynard, Simmonds, Alecia Wells and one non-voting Senate representative, Sen. Shawn-Michael Malone. The other non-voting member, Sen. Luther Renee, was excused.
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