Home News Local news Outage, Effects of Oil Price Increase Aired at PSC Meeting

Outage, Effects of Oil Price Increase Aired at PSC Meeting


March 20, 2006 – True to form, Monday's Public Service Commission meeting began after a power outage shut down most of St. Thomas.
According to Glenn Rothgeb, chief operating officer for the Virgin Islands Water and Power Authority, Monday's outage was attributed to problems with a force draft fan in one of the utility's units. He said the outage, which lasted about three hours, affected the west and north ends of the island, along with parts of the Hospital Ground and East End areas. Rothgeb said power was restored around 5:30 p.m. and that the outage did not affect St. John.
In other news, board members were informed that the Levelized Energy Adjustment Factor (LEAC) would increase by two-tenths of a cent beginning April 1, meaning customers will notice an increase on their bills. Customers will also notice an increase in the water LEAC, a ten-cent, or .2 percent, increase per month.
Because the actual price of oil – delivered this month at $64.89 per barrel – was higher than the forecast price of oil by $2.30, WAPA was allowed to switch to an automatic LEAC, which does not have to be approved by the Commission.
According to Attorney Boyd Sprehn, WAPA switches to the automatic LEAC when the actual price of oil varies up or down from the forecast price of oil by more than $1.75 per barrel.
On the topic of small power providers, WAPA counsel Lorelel Farrington told board members that they are waiting for Gov. Charles W. Turnbull to sign off on an amendment to the Jobs Creation Act that gives the utility 60 more days to negotiate a contract with Innoventor Technologies, a company recently selected by WAPA to be the small power provider for St. Croix.
Farrington said WAPA has created a schedule for the negotiations, and hopes to turn in the contract to the PSC for approval by the new May 17 deadline (See "Senate Approves Extension for WAPA-Innoventor Contract").
The PSC will have 30 days to approve the contract once WAPA submits it.
Larry Gawlik and Jamshed Maden, technical consultants to the PSC, said WAPA has finalized the condition assessment report investigation ordered by the Commission in 2004. The investigation, including a study of WAPA's power production facilities on St. Thomas and St. Croix, was supposed to be, according to Gawlik, a "detailed road map" showing how WAPA could mitigate LEAC costs and diversify its fuel resources over a three- to five-year period.
"However," Gawlik said, "while WAPA may believe that the investigation has been concluded, the Commission's technical consultant is of the opinion that not only has WAPA failed to conduct the investigation in the collaborative manner sought by the Commission, more importantly, the investigation has failed to meet the primary objectives of the lower LEAC rates to ratepayers and fuel diversification."
He further explained that during a critical phase in the study, WAPA did not allow the PSC's technical consultants to participate, and submitted a completed study based on WAPA's own findings.
"Since last spring, we have requested that WAPA provide us with evidence to support those findings, but we have not received any information from them," Gawlik said. "Additionally, two months ago we entered into a memorandum of understanding with them, and still haven't received anything we've requested."
Maden added that because WAPA has claimed there is little that can be done to reduce rates, its study shows that fuel levels will be remain at the same level for the next 10 years since the technology proposed by Innoventor will cause no significant decrease in the LEAC.
As for other alternative energy possibilities, Gawlik said WAPA has recently taken steps to implement a new heat recovery boiler at the utility's Richmond plant on St. Croix, which could result in $7 to $8 million annual savings that could be passed on to the consumer.
Gawlik said the project would take about 18 months to complete, and that WAPA has been focused on bringing Innoventor to St. Croix before the terms of the Job Creation Act expire.
"So, after three years of effort, WAPA has essentially presented the Commission with an unattractive scenario in which WAPA customers obtain no relief from high LEAC costs and obtain on appreciable fuel diversity, while electric and water operations continue to perform under a status quo scenario," Gawlik said.
Gawlik's statements raised the ire of Commission members, who asked WAPA representatives why they haven't been communicating with the PSC's technical consultants. Attorney Samuel Hall, legal counsel to WAPA, said he had only received Gawlik's presentation three minutes before Monday's meeting began, and would need more time to review the statements. However, he did say they were, for the most part, untrue.
Rothgeb said WAPA's first priority, because of the deadline imposed by the Rate Reduction Act, is finding a small power provider for St. Croix. He added that WAPA is committed to working in a collaborative, not adversarial, fashion with Gawlik and Maden.
Board members also briefly discussed an investigative report released in 2004 by Inspector General Steven van Beverhoudt, charging that many St. Croix residents were stealing power and water from the Water and Power Authority, and that WAPA employees were helping them do it (See "WAPA Audit Charges Employees and Residents With Blatant Theft and More").
Farrington said that WAPA had sent nine letters to the Inspector General's office about the matter, but had not yet received a response. Correspondence sent to the fraud division of the local Justice Department has also gone unanswered, she said.
All board members except for Sen. Roosevelt C. David were present at Monday's meeting.

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