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WAPA CONCERNED ABOUT THE EFFECT OF RISING FUEL PRICES

(Tuesday, March 15, 2011)

        Virgin Islands Water and Power Authority Executive Director Hugo V Hodge, Jr. confirmed today that the utility has petitioned the Public Services Commission (PSC) for an increase in the customer fuel surcharge effective April 1. Hodge said that WAPA has received numerous customer inquiries about possible adjustments to the levelized energy adjustment clause (LEAC) factor as they observe price increases at the gas pumps almost on a weekly basis.  The PSC established the LEAC in 1981 so WAPA could stabilize the cost of fuel needed to operate its power plants. The charge, collected from customers based on their monthly energy usage, is passed directly to HOVENSA for fuel purchases. WAPA is required to file quarterly petitions with the PSC for a LEAC increase or decrease based on projected world oil market prices.

 

        “We are very concerned about this situation as we observe the dynamics of our territory’s 12 to 18 month lag in the nation’s recession,” Hodge said.  “The coupling effect of signs of recovery on the mainland includes higher fuel costs, which leads to repercussions here in the territory. Unrest in the Middle East also complicates oil pricing and leaves us all the more concerned about what it means to our customers,” he said.     

 

        WAPA will appear before the Public Services Commission on March 22 to explain its request, which, if approved, will increase the monthly bill of the average residential customer using 500-kilowatt hours (kWh) by 20% or $40.

 

        The current LEAC factor effective from December 1 to March 31 was based on fuel oil projections of $89/barrel. HOVENSA already delivered earlier this month at $100/barrel, Hodge said.  The market price is currently $110 after going as high as $116 last week, he added.

 

        “As ratepayers ourselves, we are extremely mindful of what the cost of energy does to our customers and especially what it can do to our business community. It is critical that all of us as customers conserve electricity and water as much as possible to combat rising fuel costs,” said Hodge. “At the WAPA plants, we work daily to conserve in our operations by making the most efficient use of the heat recovery steam generator (HRSG) recently installed in the Richmond Power Plant which saves over $2 million per month in fuel and operating costs,” he said. Current repairs to generating units in St. Thomas’ Harley Power Plant will further improve WAPA’s efficiency and operating costs.   

 

        Hodge also confirmed that WAPA is steadily advancing towards alternative energy solutions. The utility will release a solar energy request for proposal (RFP) before the end of March and a wind RFP will follow in about six months after data is gathered from anemometers being erected by the Virgin Islands Energy Office.

 

END