Dec. 17, 2005 — V.I. residents will see their electric bills go down slightly in January, but their water bills will go up.
"The consumer is not going to get much of a break," said Alecia Wells, vice chair of the Public Services Commission, on Friday.
The PSC voted to give a bigger decrease in the LEAC than was being recommended by the Water and Power Authority. Nellon Bowry, WAPA's chief financial officer, wanted a 2.6 percent decrease, which would save the customer using 500 Kilowatts a month $3.44. The commission approved a 2.9 percent decrease for a savings for the above customer of $3.77 per month.
The larger increase was approved after a report by Georgetown Consulting Group said WAPA was not meeting its goals for reducing electric line loss and unaccounted consumption. The report was issued Dec. 13. Bowry asked the commission to give WAPA time to analyze the report. He said that he believed that WAPA had come pretty close to the goals.
Commissioner Verne C. David said, "Close is not good enough."
The decrease will be 2.9 percent for commercial customers or about $8.96 for the average commercial user. Large power users will receive a 3.1 percent reduction.
The new rates are probably short term. The PSC has delayed until its January meeting a discussion on whether to allow automatic LEAC changes that it has allowed WAPA when the price of a barrel of oil varies by $1.75.
(See "Electric Bills Will Increase").
The volatile oil market has caused many problems for WAPA. Bowry admitted that even January's decrease was not based on real figures. He said it was assumed in the calculation that the price of a barrel of oil would be $56, but on Friday the price of a barrel was $60.
Commissioner Joseph Boschulte questioned Bowry whether WAPA was doing anything about hedge funds or trying to lock in its purchases at $56 a barrel before it rises to $60 a barrel.
Bowry said WAPA's governing board was actively pursuing that as a possible resolution. In a WAPA governing board meeting last summer hedge funds were discussed. Members expressed two concerns – there could be a substantial fee costs in a hedge fund operation and WAPA could end up locking into high prices and the price of oil drops. At that meeting WAPA board members stated that the PSC would have to be a participant in the effort and share in the blame if it did not work out.
James Hamilton, in an article in the October The Atlantic Monthly said, "The future price of oil is virtually impossible to predict, even for experts."
He analyzed people who were willing to put their money behind their conjectures – investors buying oil futures. His figures show that 48 percent of those investors felt oil would be below $60 a barrel next June. Fifty-two percent believe it will be above $60 a barrel.
V.I. water rates will increase by 3.3 percent in January, raising the customer's bill who uses 2,400 gallons a month by a $1.58 a month.
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