May 31, 2005 The Senate Government Operations Committee sought to get to the root cause of the continuous battle between the V.I. Water and Power Authority and the Public Services Commission during a hearing Tuesday.
The task was not an easy one both WAPA and the PSC had differing opinions on the constant feud between them, leaving senators to come to their own conclusions.
Committee Chairman Adlah "Foncie" Donastorg called the meeting to receive an overview of WAPA, including consumer concerns and the apparent rift between the utility and the PSC.
Sen. Terrence "Positive" Nelson said it seems as if WAPA and the PSC were constantly battling with each other.
"Yes, there has been an awful lot of tug and pull between WAPA and the PSC," said Roy Anduze, member of the WAPA governing board. Anduze said he felt the tension was caused because the WAPA board receives one set of information, and the PSC receives another set. "The information given to the PSC by its consultants is wrong," Anduze said.
Both Anduze and Alberto Bruno-Vega, WAPA executive director, referred to recent recommendations made to the PSC by its consultant, Georgetown Consulting Group. The report compared WAPA's heat rate to other island systems, including the Cayman Islands and Guam, and found the authority's heat rate to be almost twice that of the other islands. The report further stated that if WAPA were to achieve the heat rate systems of the other islands, ratepayers would see savings of more than $50 million per year. However, the islands mentioned use slow-burning diesel units.
Bruno-Vega said the consultants were recommending technology that could not be used by WAPA.
"Diesel units are very efficient," Bruno-Vega said. "But they are not licensable in the United States Virgin Islands."
Bruno-Vega said the consultants should have known not to recommend the diesel units because the U.S. Environmental Protection Agency has disallowed the units for the U.S. mainland and the Virgin Islands.
PSC Chairman Valencio Jackson said Anduze's and Bruno-Vega's statements were "untrue." He said the PSC consultants never recommended diesel; they just said that was one of the things that could be looked into.
"They believe that our consultants are faulty," Jackson said. "It is not faulty information that comes from the PSC's consultants. WAPA moves on what it wants to move."
Jackson said the reason for the conflict between the two agencies was WAPA's failure to provide requested documents on a timely basis and its failure to comply with the PSC's orders.
"It makes no sense to me when we have two agencies, supposedly created for the public interest, fighting," Sen. Ronald E. Russell said. "I believe this institution has to step in with drastic measures."
Russell said the PSC does not trust the WAPA board, and WAPA board does not trust the PSC. "Maybe we need to dismantle one," Russell said.
Jackson said the legislations creating the WAPA board and the PSC did not give clear lines of demarcation as to the jurisdiction and roles of each entity. He said right now when the PSC makes an order, the WAPA board could decide not to follow it and take the commission to court, which it has done on at least two occasions.
"The law is a bit ambiguous," Jackson said, adding they were awaiting a legal opinion from Superior Court on the matter.
Under questioning by Russell, Boyd Sprehn, PSC legal counsel, said the matter has been pending before the court for more than a year now.
"If the court doesn't see that these issues are of great concern to this community, and leave them pending, that's a problem," Russell said. "I don't like this fighting back and forth."
Russell said the courts should move on the matter expeditiously.
"We're spinning our wheels," Russell said, because the court cases between the two entities need to be resolved for everyone to move on.
Sen. Louis P. Hill said WAPA and the PSC have a communication problem, one that is costing the ratepayers millions of dollars in assessments, consultants and attorney fees.
Sen. Liston Davis urged the two entities to find common ground.
In other action, the committee voted 5-2 to subpoena all members of the WAPA board who failed to appear for the hearing. Anduze was the only board member attending. Sens. Donastorg, Davis, Juan Figueroa-Serville, Shawn-Michael Malone, and Nelson voted in the affirmative. Sens. Hill and Russell voted against the subpoena.
Senators also discussed the utility's efforts to reduce the levelized energy adjustment costs (LEAC), the amount owed to the utility by the V.I. government. They also discussed WAPA's response to legislation sponsored by Sen. Norman Jn Baptiste that was recently vetoed by Gov. Charles W. Turnbull.
Bruno-Vega told the committee that the utility had made steps to reducing the LEAC, including reducing the territory's line loss to about 8 percent. He said the utility had just undergone a $250,000 study to assess its existing generators and gain recommendations for making the units more efficient. The WAPA board was also discussing fuel hedging as an option locking in a fuel price for a certain time period.
Anduze said he is against hedging because it is "very risky." If WAPA were to lock in a price, and the price of a barrel of oil dropped below the locked-in amount, the utility would still have to pay the higher price for the remainder of the hedging period.
Donastorg recommended to both WAPA and the PSC to consider broadband services as an additional source of revenues to help reduce utility rates.
Nellon Bowry, WAPA chief financial officer, told the senators the government and its instrumentalities owed the utility $13.3 million, 70 percent of which was past due. Bowry also revealed that WAPA did not pay its payment in lieu of taxes (PILOT) last year. He said WAPA was currently in talks with the governor for a swap.
Figueroa-Serville asked Bruno-Vega to explain why he did not approve of Jn Baptiste's legislation, which would have forced WAPA to enter into a power-purchase agreement with a small power producer willing to invest heavily on St. Croix.
Bruno-Vega said the legislation was geared towards one particular company Caribbean Energy Resources Corp. and would "negatively impact" the community. (See "WAPA Won't Be Forced Into Power Agreement")
Jn Baptiste said WAPA was the one with "special interests," adding WAPA's proposal to purchase alternative power for the short-term was geared towards one company St. Croix Renaissance Group.
All committee members were present at the hearing.
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