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Hansen LEAC Suit Mostly Tossed, One Question Remanded

Sen. Alicia "Chucky" Hansen’s lawsuit challenging increased electric bill fuel charges last summer was setback last week with Superior Court Judge Harold Willocks dismissing most of the suit and remanding a tiny portion back to the PSC for more detail.

Early in his decision, Willocks made it clear the court would not be the agent of Hansen’s quest, saying it is "limited to determining if the PSC acted in an arbitrary or capricious manner, or whether the decision was based on fraud."

"The issues raised by petitioner are of such that this court does not have the authority or the power to be the slayer of the LEAC as was foretold," Willocks wrote in the Jan. 12 decision.

Hansen raised three legal issues in her suit:

  • The V.I. Water and Power Authority failed to comply with a legislative mandate to hold public hearings;
  • The petition for a LEAC increase should not be based on the fluctuation of oil prices on the market and the cost of WAPA refinancing its $40 million fuel-purchase loan, but only the specific prices negotiated for WAPA in the territory’s third extension agreement;
  • The PSC had insufficient information to consider the interest payments on WAPA’s loans as a factor to increase the LEAC.

Willocks dismissed the claim that WAPA failed to comply with a legislative mandate to have public hearings. WAPA once set rates, but in 1973, then-attorney general Vern Hodge held the PSC had jurisdiction over rate-setting. Since that time, the PSC, not WAPA, has rates, so the PSC, not WAPA, is the body that must have public hearings, Willocks said. The PSC did hold public hearings.

Willocks did not directly confront the question of what the PSC should consider when looking at a LEAC, saying the PSC created the LEAC as part of its rate setting role, and the PSC has both the responsibility and the authority to determine reasonable rates.

"In essence [Hansen] is asking this court to substitute its judgment for that of the PSC. This would be a violation of Virgin Islands law," Willocks wrote. "[W]hat is really telling here is [the law] does not give the court the authority to determine if the rates were just and reasonable. Nor… what information must be considered when fixing rates."

Willocks remanded the last question – whether or not the PSC had enough information about interest payments on WAPA’s fuel loans – back to the PSC for "an appropriate finding."

If the PSC, or a later court now finds itself in agreement with Hansen on this one remaining question, then the portion of the LEAC increase devoted to paying interest on those loans could be reversed.

For the LEAC period under scrutiny (July 1-Sept. 30, 2011) direct fuel payments account for $62.5 million in LEAC charges, according to a 2011 PSC report by Georgetown Consulting Group. Principal on the loan used to purchase fuel accounts for another $2 million, and the interest on that loan – the one portion the court sent back to the PSC for reconsideration – amounts to $435,000, or less than one-percent of total LEAC billing for the period in question.

Willocks explicitly disagreed with Hansen’s legal argument, but sent the question back nonetheless, directing the PSC to fill in the blanks and list the explicit connections that are necessary to make its case.

Willocks quoted Hansen’s argument that the PSC "had insufficient information to consider the interest payment on WAPA’s loans as a factor to increase the LEAC," but said "the Court disagrees."

While the PSC’s own records provide plenty of information to support its conclusion, the PSC did not give that information in its findings.

"Here, though, the record when read is sufficient in its entirety, the Findings are woefully inadequate, and cursory at best. Nowhere… do they outline any specifics in which the Commission relied upon for their decision," Willocks wrote, giving the PSC 15 days to fill in the requisite detail.

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