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WAPA Files Petition to Reduce LEAC by 34%

(Monday, November 10, 2008)

Hugo V. Hodge, Jr., Virgin Islands Water and Power Authority Executive Director, personally delivered a petition to the St. Thomas offices of the Public Services Commission (PSC) on Friday seeking a 34% reduction in the residential customer’s Levelized Energy Adjustment Clause factor. While the new rate would be effective January 1, 2009, if requested by the PSC, WAPA could likely acquiesce to implementing the reduction on December 1 with slight adjustments to the numbers based on present fuel costs. Hodge said that WAPA has been working very closely with Governor John P. DeJongh, Jr. and the PSC to achieve lower electricity costs for WAPA customers which is one of the Governor’s top priorities.

The proposed LEAC, the surcharge which covers the cost of fuel used to produce water and power for WAPA’s customers, is 0.21166 representing an 11-cent or 34% reduction from the present factor of 0.32217 in effect since October 1. It is also 49% below the September LEAC factor of 0.41395. In the new petition, the average residential WAPA customer using 500 kilowatt hours (kWh) monthly will pay $148.22, a reduction of $55.57 or 27% from the current overall monthly billing of $203.79

Hodge said that the monthly bill of the average commercial customer using 1200 kWh and presently paying $564.40 will decrease by $143.91 or 25.5% to $420.49. Large power customers at 30,000 kWh monthly paying for power at a cost of $15,625.18 will now pay $11,196.94, a decrease of $4,428.24 or 28.3%

Two major factors influenced the proposed reductions, Hodge said. A barrel of crude oil which peaked in July at $147 per barrel has since fallen 60% to about $60 dollars a barrel last week. This represents a significant savings on the 200,000 barrels a month WAPA uses to run the generators in its power plants. Additionally, with the Governor’s assistance, WAPA successfully negotiated a $40 million loan from First Bank Virgin Islands to pay off the utility’s debt to HOVENSA for fuel purchases earlier this year the cost of which was under recovered from customers. The under recovery costs were eliminated from the LEAC factor and replaced with a smaller amount to cover the cost of the loan.

With the PSC approval, the water LEAC factor for the average residential customer using 2400 gallons will be $5.81 per thousand gallons which is 58% below the $13.72/thousand gallons residential customers pay currently. Bills will drop from $71.49 to $52.40 or by 26.7%.

Hodge said that the petition will be discussed at a special PSC meeting set for this Wednesday. “We are really looking forward to Wednesday’s meeting,” Hodge said. “We would love to see people with extra money in their pockets for Christmas.”