PSC Considers Raising and/or Lowering WAPA Rates

David Hughes, center, chairs the PSC meeting. To his right is Raymond Williams, and to his left is Pedro William. WAPA’s new executive director Andrew Smith has his back to the camera. (Screenshot of meeting from Facebook)

The Public Services Commission Friday allowed the Water and Power Authority to remove a five-cent kilowatt-hour charge for the Vitol project, but it remains to be seen whether residents will see that drop in their WAPA bill.

After Commission members refused to extend the five-cent charge beyond its initial five-year period ending March 1, they took up the matter of a potential rate increase in LEAC.

The Commission did not take immediate action on an increase that would reflect the rising cost of fossil fuels, but it directed its staff to research whether one was necessary.

Commission Chair David Hughes said, “We are aware that when WAPA under recovers its fuel costs, it can’t pay for its fuel.”

The staff is to make its report back to the Commission before its mid-February meeting.

Hughes said the recommendations could be put into place by March 1, the day the Vitol infrastructure charge ends.

Commissioner Raymond Williams told the Source after the meeting that the main takeaway was that residents could see a decrease in their bill.

The five-year, five-cent charge was to recover the cost of the WAPA conversion to propane.
However, Andrew Smith, the new chief executive officer at WAPA, said the Authority was not able to collect the anticipated amount because the Authority had a “reduced customer base” after the 2017 hurricanes.

Hughes did not disagree with that argument but said the Authority received federal recovery funds because of damage during the hurricanes, and those could have helped with the Vitol bill.

Marie Thomas Griffith, an outside attorney for WAPA, said when the five-cent charge was approved, the intention was to pay off the costs of the Vitol infrastructure, and there was no reference to using other funds.

No one mentioned cost overruns in the project or an Inspector General report highly critical of how the contract was handled.

The IG’s report said the plan was originally for eight generating units to be converted to propane. Only three of those eight units can burn propane now.

The price of propane rose dramatically last year and has spiked again recently. In 2020 Vitol raised the propane price to WAPA, citing the fact that WAPA was not using as much as Vitol had expected.

Smith asked the Commission to extend the rate for another 11 months. Commissioner Pedro William made a motion to do that, but it failed for lack of a second.

The Commission also had a public hearing on the base rate inclusion of costs of leasing emergency generators that no longer exist. The removal of that could reduce customer rates by over two cents per kilowatt-hour. Residents pay 40 cents per kilowatt-hour for the first 250 kWh and 43 cents per kWh for any more than the 250.

Boyd Sphren, PSC legal counselor, said that the two generators were not in use and probably had been out of use right after the lease costs were approved.

Hughes said he was reticent about taking two more cents off the rates after already taking five cents off the rate. He said that this might be an overcharge, but WAPA was undercharging in other areas. He said the adjustment would be better dealt with in May or June when the whole rate flow was reviewed.

Commission members Andrew Rutnik, Pedro Williams, and Raymond Williams agreed with him, and no action was taken.

Hughes also asked Smith about outstanding monies WAPA owes the PSC. Smith stated that WAPA had cleared up its outstanding assessments for the fiscal year 2021 but owed two assessments for the present fiscal year.

The Commission also heard an update on new Wartsila generators. Project Manager Odari Thomas said the project should be completed early in 2023 and, with its battery storage component, should cut down on power outages on St. Thomas.