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Charlotte Amalie
Tuesday, October 4, 2022
HomeNewsArchivesComplications Take the Floor as PSC Agrees to Raise LEAC

Complications Take the Floor as PSC Agrees to Raise LEAC

After three hours of testimony, four motions and two recesses, the Public Services Commission voted Tuesday night to increase the Levelized Energy Adjustment Clause (LEAC) effective Jan. 1.

The LEAC is a surcharge added to consumers’ utility bills to recover the cost of fuel in a dramatically fluctuating market. It is adjusted quarterly to reflect the changes in fuel oil prices and goes up or down according to those prices. The adjustments will amount to an average of $7.02 increase in the electric bill for residential customers and $13.62 in the water bill for the first quarter of 2013.

What started, at the offices in Barbel Plaza on St. Thomas, as a love story between the PSC’s consultants and the Water and Power Authority’s executive team took on a different tone when the PSC commissioners essentially copied and pasted 12 recommendations from a 45-page consultant’s report into a motion to accept the agreed upon water and electric LEACs.

The love fest deteriorated further when Commissioner Joseph San Martin made a motion, which passed unanimously, to remove the electric LEAC adjustment from the lengthy motion that would have traditionally included both the water and electric LEAC.

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Notably, WAPA and Georgetown Consultants, the private firm that advices the commission, agreed fully upon the suggested increases, which brought the LEAC to $.412648 per kilowatt hour and water to $14.60 per 1,000 gallons of water.

Georgetown principal Jamshed Madan, while lauding WAPA’s accomplishments, testified repeatedly that the consultants and WAPA officials had come closer than ever to seeing eye to eye on several issues during meetings over the last few days. Madan said the atmosphere of cooperation, included “getting closer on the IAC,” a measure to have an independent agent monitor the day-to-day operations of the utility. It is a demand that has previously rankled the authority’s governing board and executives.

WAPA Executive Director Hugo Hodge saw things differently. Hodge argued he had not had time to review Georgetown’s recommendations properly, having been given the report on Saturday, but said several were not OK with him. One in particular would delay the Jan. 1 implementation of the LEAC if WAPA was not current with its assessments, which ultimately find their way to Georgetown by way of payment for consulting services. Current assessments, which were later read into the record and approved by all commissioners, amount to $239,000.

Hodge said he could respond within a week to the consultant’s recommendations, several of which had to do with more transparent and detailed reporting on the part of WAPA.

Madan said the more detailed reports represented a “base of knowledge the commission should have, the public should have, the media should have.”

Commission Chairman M. Thomas Jackson agreed, while acknowledging that the calculations that affect fluctuation of the LEAC were complicated.

The proceeding took on its own complications when San Martin, who was speaking via teleconference from St. Croix, introduced his motion to allow the proposed increase in the electric LEAC only after Hodge had shown him how he intended to decrease the “huge” government debt to the authority. The motion ended in a tie, with Jackson and Hamad voting against it, and Thomas-Trotman voting in favor, effectively killing the motion and leaving the electric LEAC in limbo two and a half hours into the WAPA portion of the five-hour meeting.

A stunned silence briefly preceded audible gasps from the audience.

Hodge said the government debt has been reduced from $34 million in February, to about $5 million for electric and $3 million for water – amounts that Hodge said were “current.”

San Martin said he wanted that fact in writing, asking Hodge when he could deliver.

“I can deliver that right now, “ Hodge said, exiting the building.

A recess was called with a motion on the floor to reconvene Friday for Hodge’s response to the consultant’s report and the government collections information in writing.

Hodge reappeared, laptop in hand, and pointed out that the information on the current government receivables was indeed in the report the commissioners had in their possession. Standing over the shoulder of WAPA Chief Financial Officer Julio Rhymer, he verified the current receivables. They do not include Juan F. Luis Hospital, which is a semi-autonomous government agency and in dire financial straits.

After another recess, the two commissioners on St. Croix – San Martin, and Sirri Hamad – along with PSC attorney Tanisha Bailey-Roka, returned to the phone lines with yet a fourth motion. Unlike the earlier motion approving only the water LEAC, along with the 12 consultant’s recommendations, this one was one sentence moving that the electric LEAC be approved. It passed 3-1, with Thomas-Trotman voting against the adjustment. Commissioners Donald Cole and Verne C. David were absent.

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