March 26, 2003 – After a short meeting of the Public Service Commission Wednesday, commissioners voted four to one, with one abstention to approve a previously negotiated 9.6 percent electric rate hike for the Water and Power Authority.
The decision had been tabled at the last regular meeting of the PSC Thursday on St. Croix, while commissioners took the time to review exactly how the increase, which is the basis for a new $70 million bond issue to fund capital projects and to pay off existing debt., is going to be used, Valencio Jackson, new commission chairman, said Wednesday. (See PSC defers decision on electric rate increase")
Commissioners agreed to the increase only with the stipulation that the regulatory agency would implement an "unprecedented" level of control.
A release distributed by fax before the meeting convened outlined the PSC's perspective on the increase.
"Following extensive discovery and written submissions by the Authority and the PSC's consultants, several days of hearings, and public meetings on each of the islands, the hearing examiner submitted a comprehensive 91-page report to the Public Service commissioners which recommended a rate increase to be shared equally by the all and large electric power users averaging 9.6 percent.
This increase would also enable WAPA to secure a new bond issue of $70 million."
The release goes on to say, "The commissioners are unified in their reluctance to add to the burdens of Virgin Islands consumers," particularly after the recent Levelized Energy Adjustment Cost (LEAC) increased brought on by the increase in oil and gas prices, but, the release said, "We are at a crossroads. It is apparent that the interest rates are at an all-time low. Failure to take advantage of the current low costs of financing will only result in great future costs, an unnecessary burden on the consumers."
Along with paying off an $18 million previous line of credit the bond proceeds are set to fund the following capital projects:
– A new generator for St. Thomas – $15 million
– New substation for St. Thomas – $5.1 million
– New waste heat boiler for St. Croix – $10 million
– Extension of underground feeder No. 8 to Frederiksted on St. Croix – $6.6 million
– Repair of broken rotor on unit 11 on St. Thomas – $3 million
– Replace burner on unit 13 on St. Thomas – $3 million
– Install third submarine cable between St. John and St. Thomas – $2.5 million
– Reblade the turbine and returbe the boiler on unit 11 on St. Croix – $6.5 million
The stipulations for control over the utility in exchange for the rate increase include: requiring justification of the final designs of the projects; review of the methods chosen for each project; review of the progress of each project implementation though the PSC's consultants, Georgetown Consulting Group; and monitoring the impact of these projects on the level of service to WAPA customers.
Commissioner Verne David also told WAPA officials in attendance at the meeting he wanted to see something done about the "appalling" state of street lights on St. Croix.
In a recent trip to St. Croix, David said he rented a car and drove around at night and found many street lights in residential areas not working.
Jackson reiterated the commission's stance on oversight, "We will not tolerate our stipulations being overlooked….they are orders."
Alberto Bruno-Vega, WAPA executive director said, "I am very pleased with the results of the commission's order. They took a very bold step," he said. "No one wants to increase rates to the community. WAPA doesn't."
Although the increase was not as great as the utility originally requested it is sufficient, Bruno-Vega said, to complete the most crucial projects.
Voting yes on the motion to allow the increase were Jerris Browne, David, Jackson, and Alric Simmonds. Alecia Wells voted no and Desmond Maynard abstained.
Sen. Luther Reneé was also in attendance, and is a member of the commission, but in his new position as a senator cannot vote. Sen. Shawn-Michael Malone had contacted the commission to say he could not attend the meeting.
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