The Virgin Islands Water and Power Authority
Corporate Communications
NEWS RELEASE
Contact: Jean P. Greaux, Jr., Director of Corporate Communications
340-774-3552 extension 2147 or 340-244-7330
WAPA FILES PETITION FOR RECONSIDERATION OF PUBLIC SERVICES COMMISSION
DECREASE OF FUEL SURCHARGE, LEAC
The Virgin Islands Water and Power Authority on Tuesday petitioned the Public Services Commission to reconsider its decision of December 12 in which it lowered the fuel surcharge, known commonly as the LEAC, did not take any action on the base rate petition, and allowed the lease generation surcharge to expire at the end of this year.
WAPA said that as a result of the PSC’s action, the Authority will be unable to meet its payment obligations to its LPG fuel supplier, VITOL and will be unable to purchase the lower cost propane fuel. WAPA will be forced to utilize the more expensive No. 2 fuel oil to generate electricity in the territory.
The petition notes that, “On reconsideration, the LEAC for the period January 1 to June 30 must be based on the cost of No. 2 oil” which will increase the LEAC by approximately 20 cents per kilowatt hour. The increase will enable WAPA to purchase diesel fuel in order to operate the two power plants continuously. “The failure to receive reconsideration of this rate will mean the Authority will be unable to purchase sufficient fuel for its generating needs.”
On December 12, 2019, the PSC voted to:
• Lower the LEAC by approximately 3 cents per kilowatt hour;
• Take no action on a base rate petition pending before the commission that would have resulted in no change to ratepayer’s overall bills;
• Allow the leased generation surcharge authorization to expire at the end of 2019.
The LEAC must now be based on the fact that propane fuel will not be available as a less expensive fuel supply, and instead the Authority must purchase No. 2 oil in order to operate its generating units. On 100% oil, WAPA will not be operating its most efficient units to generate power. “Instead of a projected decline in the LEAC, for the first six months of 2020, the fuel surcharge must now be based on the cost of No. 2 oil which will increase the LEAC.” When the increased LEAC is added to the current base rate, residential customers will face an overall cost of approximately 57 cents per kilowatt hour.
WAPA’s reconsideration petition notes that the Authority is very mindful of the hardship that a significantly increased LEAC will impose on ratepayers at this time. However, unless the LEAC is increased, the Authority will not be able to supply electric power in the territory on a continuous basis. This will result in power outages.
Alternatively, the Authority offered that the commission could grant WAPA a temporary surcharge equal to $29.7 million, based on the PSC hearing examiner’s recent report. This would equate to 5.7 cents per kilowatt hour. This surcharge would need to remain in place until the PSC acts favorably on the permanent base rate petition now before it for consideration. This would result in an overall residential cost of approximately 43 cents per kilowatt hour.
The Authority continues to need the base rate increase in order to meet all its obligations, and to refinance the Vitol LPG project and other debt, which would lead to lower rates for WAPA’s customers.
The Virgin Islands Water and Power Authority is an autonomous agency of the Virgin Islands Government which produces and distributes electricity and drinking water to residential and commercial customers in the territory. WAPA was created by the Fifth Legislature of the Virgin Islands in 1964 through Act No. 1248. Today, WAPA generates electrical power at production plants on St. Thomas and St. Croix, and distributes electrical service through smart grids to customers on St. Thomas, St. Croix, St. John, Hassel Island, and Water Island. Potable water is distributed to almost 13,000 customers through water lines and standpipes. WAPA also has the responsibility of installing and maintaining street lights.