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WAPA Ratepayers Get Early Christmas Present

Dec. 14, 2006 V.I. Water and Power Authority customers got a bit of good news for the upcoming year as the Public Services Commission voted unanimously Thursday to decrease the Levelized Energy Adjustment Clause (LEAC). The change will take effect in January.
In a meeting held at the American Legion Hall on St. Croix, WAPA officials met with the commission to provide their semi-annual review of the LEAC, essentially a customer surcharge to help the authority cover the cost of fuel when it rises above WAPA's base rate. The LEAC is recalculated every six months based on the price of fuel.
"As long as fuel costs stay the same," said WAPA Chief Financial Officer Nellon L. Bowry, "we can continue to see a reduction in LEAC."
Residential customers should see an estimated 7.6 percent reduction in rates; while commercial customers and large power users will see 7 and 8 percent reductions, respectively. Bowry said the lower rates reflect a recent reduction in fuel costs.
"The costs to the public are going down," Bowry said. "If rates increase too much, we may need to petition the PSC again."
The commission discussed other steps that WAPA must take, in particular a condition assessment study. PSC consultant Jim Madan said the study is "most important," calling it a "road map for future expansion."
"A lot of it is a balancing act," Bowry said, noting the authority has yet to receive payments from major entities like Juan F. Luis Hospital, whose WAPA debt exceeds $5 million.
"[WAPA] has to be more efficient with its operations," said Commissioner Joseph Boschulte. "There are some problems with cash flow, but WAPA's not a financially troubled company."
A report on the status of the Heat Recovery Steam Generator (HRSG), a boiler which uses steam to power electric generators, showed the authority could see a possible savings of $10 to $13 million dollars. That's the good news.
However, Gregory Willocks, WAPA's chief engineer, told the commission the authority was "not making too much progress" in the negotiations with Harris Corporation, the contractor charged with constructing the HRSG.
"Their first proposal was too high," Willocks said. The negotiations have caused some delay in the process, Willocks said, adding that the authority accepts some responsibility for the delays.
"These are the kinds of projects that should be high on the priority list," Boschulte said. Willocks assured the commission that officials at WAPA had indeed put the project at the top of their list.
"We are not delayed yet," Willocks said. "We are just letting the commission know there's a possibility for delay, but we are doing everything to prevent it."
Commissioner Donald "Ducks" Cole told WAPA officials: "Do your part to help make contractors' delays not affect [the outcome] so much."
Commissioners in attendance were chairperson Alecia Wells, Cole, M. Thomas Jackson, Raymond Williams, Sirri Hammond, and Boschulte. Commissioner Verne C. David was absent.
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