Public Services Commission members gave the green light Tuesday to an increase in Levelized Energy Adjustment Clause (LEAC) rates, but decided to wait 30 days before a final decision on a proposed interconnection agreement between Island Wind Power and the V.I. Water and Power Authority.
When WAPA filed its LEAC petition 45 days ago, the price of oil was up to about $80 a barrel, prompting the utility to request a 19-percent increase in the electric LEAC, which amounts to a 12.7 percent increase in the overall bill. But the price of oil has subsequently dropped and Georgetown Consultants — the PSC’s advisors on WAPA matters — recommended that the overall bill increase be reduced to 11.1 percent, bumping the electric LEAC from $0.190755 per kilowatt hour to $0.222393.
WAPA officials said during Tuesday’s PSC board meeting that they were comfortable with Georgetown’s recommendation since the current price of oil is fluctuating between $65 and $70, which does not include the $3.75 that WAPA has to tack on for shipping and delivery costs.
The recommended increase, which was unanimously approved by commission members, will add $15.81 to the monthly bill of the average residential customer using 500 kilowatt hours..
The water LEAC was also increased from $7.59 per thousand gallons to $8.19, which amounts to a 2.8 percent increase — or an extra $1.44 per month — in the overall bill for the average residential customer using 2,400 gallons.
The increases will be in effect from Oct.1 until Dec. 31.
Most of Tuesday’s meeting revolved around a proposed interconnection agreement between WAPA and Island Wind Power that would, once it is finalized, power the wind turbines at Tutu Park Mall.
Island Wind Power (IWP) — previously known as Earth, Wind and Power — was certified by the PSC last October as a qualifying facility, or small power provider. At the time, IWP representatives said they had already entered into a lease purchase agreement with the mall for the turbines, which would be used to generate just enough electricity for the mall to be able to blend its power sources and reduce its tenants’ electricity bills.
In the meantime an interconnection agreement with WAPA, which would allow the mall to hook up to the utility’s grid in order to generate the power needed for the turbines, had to be hammered out but so far nothing has materialized.
Meanwhile, WAPA has filed a petition to revoke IWP’s status, saying that they are in fact selling power and should be regulated as a public facility. Issues that arose from the initial negotiations were aired during public hearings held earlier in the summer.
During Tuesday’s meeting, PSC hearing examiner Rosalie Simmonds Ballentine recommended that WAPA’s petition for revocation be denied. She also recommended that the commission issue a proposed interconnection order and allow both sides a "reasonable" amount of time to come to terms. After that time has passed, the commission can issue a final order for interconnection, she said.
But nothing was that simple Tuesday. The discussion went round and round, with WAPA representatives saying that the lease was in fact a power purchase agreement, and IWP attorney Emily Sabo citing case law and federal statutes that she said uphold the same kind of financing conditions for renewable energy providers, along with a new local law that seeks to push forward the use of alternative energy in the territory.
"If you look at the independent power industry, 70 percent of it constitutes this type of relationship," Sabo said. "Renewable energy hasn’t come to the point where it’s cheap enough for the location owner to go out and purchase these turbines. Independent power producers have to be able to finance this industry right now."
WAPA Executive Director Hugo Hodge Jr. said the utility wasn’t opposed to competition or interconnection, but said that if IWP is going to sell power, it should also come under PSC scrutiny.
PSC members also parted ways when it came time to vote on whether or not to adopt the hearing examiner’s recommendations. While commission chairman Joseph Boschulte said the real goal of the entire process was to reduce WAPA’s load and make strides on bringing in alternative energy sources, commission member Donald "Ducks" Cole said he wasn’t really ready to make a decision since IWP’s original presentation didn’t seem to be on the up-and-up.
"I basically believe that when I made my decision that I was guided by your presentation that Tutu Park Mall was going to enter into a lease purchase agreement, and I clearly remember we spoke about the open area in the mall where the power from the turbines would go and the that the meters would be for the people inside the stores," Cole said to Sabo. "That’s what guided me when I made that vote for the QF."
Cole moved for the PSC to postpone adopting the hearing examiner’s recommendations for 60 days. The motion failed on a tie vote, along with another motion from commission member M. Thomas Jackson to adopt the report and give both sides 20 days to come to terms. In the end, Cole and commission member Elsie V. Thomas-Trotman said they might change their vote once they had a little more time to digest all the information.
The general consensus, however, was that the project should move forward once both sides have agreed on the final terms and conditions.
Voting in favor of Cole’s second motion to postpone the adoption of the hearing examiner’s recommendations for 30 days were Cole, Verne C. David and Trotman. Boschulte and Jackson voted against the motion, while board member Siri Hamad was absent.