WAPA Governing Board Approves Petition For Base Rate Increase; Increase Ahead Of Gradual Leac Rate Reduction
Apr 29, 2019
The governing board of the Virgin Islands Water and Power Authority on
Monday authorized a petition to the V.I. Public Services Commission
(PSC) for an electric base rate increase required for WAPA to generate
approximately $55 million in revenue for Fiscal Year 2020.
The additional revenue is required to offset the continued loss of
revenue due to Hurricane’s Irma and Maria, the increased costs
associated with rented and purchased generating units to meet customer
demand for electrical service while avoiding rotating power
interruptions, and funding approximately $14 million in capital
expenditures. In fiscal years 2018 and 2019, the Authority received
approximately $94 million in Community Disaster Loans to help sustain
operations, this source of funding is no longer available.
“From a financial standpoint, WAPA continues to experience an operating
deficit as its rates, set by the PSC before the 2017 hurricanes, simply
do not provide the level of funding needed for WAPA to meet its
post-hurricane operational costs. During this time, the Authority has
maintained a tight control over expenses and currently expects that FY
2019 expenses will be $30 million lower than originally budgeted.
Further, since 2016, WAPA has brought additional leased generating units
on-line, purchased new generation, and fully activated LPG operations
in both districts. The rate requests to cover the additional costs
associated with these improvements have not been granted,” said Lawrence
J. Kupfer, Executive Director / CEO.
Kupfer explained that the base rate increase being sought by the
Authority is for a specific period of time. “Over the next 12-18 months
as we add yet more efficient new generators complete with battery
storage, as we add some 15 megawatts of solar renewables to the grid,
also with battery storage, our customers will begin to see a reduction
in the LEAC and base rates. The LEAC represents the costs of fuel WAPA
purchases to generate electricity. We will be burning more of the
lower-cost propane, adding more renewables and using less No. 2 oil to
meet customer demand for service.”
For a customer averaging monthly consumption of 400 kilowatt hours per
month, the base rate increase will average $38.45 per month while a
customer utilizing 250 kilowatt hours or less per month will see an
increase of $23.69 per month.
By the end of 2020, with seven smaller capacity units on-line on LPG,
approximately 100% of the demand for service in the St. Thomas-St. John
district will be met by solar and propane, he added. The additional
capacity provided by WAPA-owned generating units will afford the
opportunity for the utility to reduce the number of units it is
currently renting from APR Energy and allow decommissioning some of the
older, less efficient, less reliable units now on-line at both power
plants.
Kupfer also said Monday that in addition to the new, more efficient
generation and the additional renewables, WAPA is pursuing financing to
execute an outright purchase of the LPG facilities on both St. Thomas
and St. Croix. Financing at a lower interest rate over a longer term
will not only represent significant savings to WAPA, but make these
facilities eligible for repair and restoration by the federal government
in the event of adverse impact by a natural disaster. Presently, WAPA
pays operating and maintenance costs to VITOL of approximately $40
million annually.
The base rate petition which WAPA will file shortly must be approved by the PSC before it can take effect.