Press Release Details

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.