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WAPA, PSC Still Battling Over Losses and Reports

May 13, 2005 – The Public Services Commission criticized the V.I. Water and Power Authority harshly during a hearing Friday.
But for all the criticism, the territory's consumers are still nowhere closer to realizing a reduction in rates from the publicly owned utility, as both entities fight through the legal system to have their way.
The commission denied four petitions from WAPA for it to reconsider various assessments charged to the utility, including charges assessed when St. Croix Renaissance applied for interconnection with the utility and when West Indies Power applied to be certified as a small power producer.
WAPA said in its petition that St. Croix Renaissance should be charged for the assessments. But PSC legal counsel Boyd Sprehn said the petition should be denied and WAPA should bear the cost.
Renaissance had claimed that because of WAPA's inaction, the charges for interconnection between the two entities were incurred.
"To suggest that these past charges were due to WAPA's inaction is inaccurate," Loreli Farrington, WAPA's general counsel, said, adding it was the PSC that ordered the authority to stop its request for proposal process, which included Renaissance.
PSC member Verne David said it doesn't make sense to him that WAPA would pay more than $200,000 in attorney's fees instead of just paying the $15,000 in assessment costs. The PSC has billed WAPA every time companies have come to it seeking certification as small power producers – a total of four times, including Caribe West Technologies and Caribbean Energy Resources Corp. as well.
Farrington told the PSC that the authority's position is that if it didn't initiate the process it should not have to pay the cost for these companies.
"Why should WAPA bear the cost?" Alberto Bruno-Vega, WAPA executive director, said. "Somebody that is serious enough to sell power to WAPA should be willing to pay the cost of certification."
Sprehn said the V.I. Code does not authorize the commission to charge applicants any fees for seeking certification. The code only authorizes the PSC to charge the utility. Sprehn said the commission had been trying to get the Legislature to propose legislation to change that.
"I don't see why there is any discussion," David said. "We need to follow the statute."
The commission unanimously denied all four of WAPA's petitions.
In other action, the commission also ordered WAPA to repay $2.2 million the utility used from its Self Insurance and Hazard Mitigation Fund last year to fill up its reserve tanks at the start of the hurricane season. The commission wants that paid before it will consider the utility's petition to use more money from the fund for burying cables. The self-insurance fund is derived from money collected from ratepayers. The surcharge is currently $0.002 per kilowatt-hour.
WAPA was supposed to have repaid the $2.2 million that was withdrawn last year by April 1 but failed to do so.
Bruno-Vega said WAPA had placed the money in a certificate of deposit to gain interest and was requesting that it use the money to bury cables in Charlotte Amalie, but the PSC asked WAPA to first repay the full amount before making any petitions for money from the fund.
Bruno-Vega told the Source that WAPA plans to transfer the money into the account by next week and resubmit its request to use $4 million from the fund to bury cables in St. Thomas and St. Croix, plus additional funds to purchase oil for its reserve tanks.
"Once [the PSC] approves the projects, then we'll take the funds out again," Bruno-Vega said. "We need to underground the system to remove them from exposure to the environment."
On Friday, the PSC also received reports from its staff concerning WAPA's Condition Assessment Study and Quarterly Line Loss Benchmark Reporting.
The staff indicated that WAPA failed to cooperate with requests of the PSC's consultants in a timely fashion and failed to produce certain documents. Because of this, the staff recommended that the matter be turned over to a hearing examiner. The board voted to accept the staff's recommendations to assign a hearing examiner to set a schedule for hearings, discovery, depositions, and submission of testimony concerning the Condition Assessment Study and report to the Commission whether WAPA acted prudently in undertaking and performing the study.
The hearing examiner's report and recommendations, as well as an identification of a recommended power supply improvement plan, shall be submitted to the Commission no later than Sept. 1.
"It is unfortunate that this is the route that the PSC must take," PSC Chairman Valencio Jackson stated in a press release. "But, it is our responsibility to ensure that the concerns of consumers are considered in addition to those of the public utility."
Staff reports also indicated that the authority failed to provide the PSC its first quarterly report of its line-loss plan.
"There exists an extensive record concerning unjustifiable and excessive Water and Power Authority system losses and unaccounted for electric and water system consumption," the report stated. "At current fuel oil costs these excessive WAPA system losses and unaccounted for consumption are costing WAPA in excess of $7 million annually. Currently, a large portion of this cost is unnecessarily being passed onto Virgin Islands electric and water ratepayers."
Bruno-Vega said the authority had hired a consultant to help with drafting a form to report actions taken to reduce line loss and that should be completed by June 15. He said the utility has met its first goal in reducing line losses and is working with the attorney general to handle instances of theft.
Bruno-Vega said he hopes that the Superior Court would soon rule who has the authority to do what in WAPA so there would be "clear lines of demarcation" as to the PSC's jurisdiction over the authority.
He added, "It's a never-ending battle of consultants with them, and the public is right in the middle."
WAPA has taken the commission to court for various issues, including an order from the PSC that prevents the utility from going forward with the competitive bidding process for the purchase of alternative sources of power.
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