March 21, 2003 – Raising electricity rates now will likely save a lot of money in the long run, according to Water and Power Authority officials.
But WAPA did not get the approval for a 9.6 percent hike it was looking for at Thursday's meeting of the Public Services Commission. Neither was the proposal turned down, however.
The PSC members heard the results of a WAPA rate investigation by Georgetown Consulting Group, a firm contracted to look into the utility's rate of return.
WAPA had originally sought an increase of 11.7 percent, and Georgetown recommended 8.2 percent. In a last-minute compromise, they agreed on 9.6 percent.
That translates to a bill increase of $8 for the "average" WAPA customer using 500 kilowatt hours of electricity per month. Whereas that customer now pays $84 a month, with the increase, the customer using the same amount of electricity would pay $92. WAPA officials say the additional revenue is needed to finance capital projects and upgrades to the power system.
"The urgent need WAPA has is to increase rates so we can finance capital projects," the authority's executive director, Alberto Bruno Vega, told the commission on Thursday. "I understand the burden that will have to be absorbed by the customer is significant," he said, "but give us the wherewithal to bring our system up to standards."
The rate increase request comes only a month after a request to increase the Levelized Energy Adjustment Clause rate, which is used to calculate a surcharge on bills that's intended to cover the projected costs of fuel every six months.
But the price of oil on the world market hit a high last week after having been on the rise for several months. With the United States at war against Iraq, there is no way to project what world market prices will be in months to come.
WAPA is feeling the pinch, the utility's chief financial officer, Robert Vodzack, told the PSC members. The utility will be about $8.5 million in debt after March, he said, and will likely have to request yet another LEAC hike to recoup its losses.
"We could end up having about a $20 rate increase over a two- or three-month period," commissioner member Alric Simmonds said. "What are customers going to say about that?"
But Bruno argued that the territory's aging electrical system needs to be rebuilt for long-term benefits. "The problem is," he said after the meeting, "if we don't rebuild the facility, the system will go down the drain." And, he added, new economic development in the territory is impossible without a strong infrastructure including reliable power.
One example of something that needs attention soon, he said, is a failing underwater cable connecting St. Thomas and St. John that will have to be replaced at a cost of about $2.5 million. "What we need is cash left over to do all these projects," he said.
The commission decided to examine the issue further at a special meeting next week on St. Thomas.
PSC members present at the hearing were Jerris Browne, Verne David, Valencio Jackson, Simmonds, Alecia Wells and ex-officio member Sen. Luther Renee. Not present were Desmond Maynard and the other ex-officio member, Sen. Shawn-Michael Malone.

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