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WAPA Proposal Would Reduce Average Electric Bill 18 Percent

Sept. 30, 2008 — With oil prices declining from record highs earlier this year, the executive director of the V.I. Water and Power Authority, Hugo Hodge Jr., presented WAPA's governing board Tuesday with a plan to reduce the customer fuel surcharge on the territory's electric rate payers by 21.5 percent.
The reduction in the levelized energy-adjustment clause (LEAC) fuel surcharge would give the average residential customer an overall reduction of 18 percent on their monthly electric bill, according to figures provided by WAPA spokeswoman Cassandra Dunn. The reduction will need approval from the Public Services Commission to take effect. WAPA submitted a petition to the PSC Tuesday morning, Hodge said, and the reduction in utility bills could begin as soon as Nov. 1. The PSC is unlikely to object to the reduction.
The Legislature and Gov. John deJongh Jr. recently increased WAPA's legal debt ceiling by $150 million, up to $500 million. As a result, WAPA is in a position to secure a $40 million line of credit from First Bank Virgin Islands to help pay Hovensa $48 million for fuel purchased earlier this year, according to Dunn. The balance of $8 million would come from the $17.5 million WAPA received last Friday from the government of the Virgin Islands to pay on its past-due bills. (See "V.I. Coughs Up $17.5M for Debts to WAPA.")
Ironically, WAPA had been working on this rate cut before the Sept. 1 increase in the LEAC, according to Hodge. (See "PSC Gives WAPA Green Light to Pass Fuel Costs to Consumers.") But when Hovensa began making WAPA pay for fuel two days in advance, WAPA needed to find resources to pay WAPA's overdue bills to Hovensa. (See "Hovensa Demands WAPA Pay in Advance for Fuel.")
Paying for oil that has already been used accounts for seven cents per kilowatt hour of the LEAC. By getting the $40 million loan, this would be removed from the LEAC charge, replaced by lower debt-service costs. This will translate into relief for rate payers, Hodge said. That, coupled with the anticipated decrease in the price of fuel paid to Hovensa, account for the 21.5-percent decrease in the LEAC.
With the Sept. 1 increase, a residential customer with an average consumption of 500 kWh is now paying an electric bill of $250, according to WAPA's figures. If the proposed rate is approved, at the same consumption, the new bill would be $204, saving about $45 a month. Commercial customers will save roughly $119, or 17.4 percent, and large power consumers will see a decrease of about $3,665, or 19 percent.
At the same time, the Water LEAC will decrease to $13.72 per thousand gallons, down from $16.41. This will save the average residential water customer using 2,400 gallons per month about $8.45, lowering the average bill a bit more than 10 percent.
"It took some creativity to deal with the LEAC, but it was done," said Juanita Young, the board's chairwoman. Solving these problems takes the government, the Legislature and the PSC coming to the table and working together, Young said.
The board also approved several expenses Tuesday:
— $229,00 to Alimak Hek for a personnel and equipment elevator for St. Croix's heat-recovery steam generator presently under construction;
— $175,000 to R. W. Beck, for technical consulting services related to the request for proposal for alternative energy; and
— $7,396 to pay Comprehensive Security Concepts for security services delivered in fiscal year 2007.
Present during Tuesday's meeting were Chairwoman Juanita Young, Brenda Benjamin, Noel Loftus, Gerald Groner, Donald Francois, Cheryl Boynes-Jackson, Housing, Sports and Recreation Commissioner St. Clair Williams, and Commissioner of Planning and Natural Resources Robert Mathes. Director of Personnel Kenneth Hermon Jr. was absent.
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