PSC Votes to Consider Payments for Disaster Loan in Future WAPA Base Rates

A WAPA crew works on a power line. (Photo provided by WAPA)
A WAPA crew works on a power line. (Photo provided by WAPA)

The Public Services Commission approved on Thursday a motion that essentially means it agrees to let the Virgin Islands Water and Power Authority pay back some $94.5 million in Community Disaster Loans to rebuild the territory’s hurricane-damaged electric and water systems.

Voting in favor of the motion were PSC Board Chairman Raymond Williams, Vice Chairman David Hughes, and members Kent Bernier and Andrew Rutnik. Member Johann Clendinen voted no.

As a public utility, WAPA is regulated by the PSC, and according to Williams, the agency’s approval to pay back the loan is a federal requirement since the payments will eventually be taken into account in future discussions of how much to charge consumers in base rates.

According to PSC officials, WAPA has already received some $91 million of the $94.5 million in Community Disaster Loans from the Federal Emergency Management Agency, but the 16-year payment scheme does not begin until 2021.

While Thursday’s approval means the PSC agrees to consider the CDL payments when the time comes to approve or reject future WAPA base rate proposals, PSC officials said this does not necessarily mean that rates will ultimately go up. For instance, three St. Thomas generating units under a contract with Wartsila – expected to save the authority $25 million a year – are slated to go online in January, and consumers could see savings from that. While a surcharge might be attached to ratepayers’ bills to pay the first round of payments in 2021, the additional charges might be offset by savings from the higher-efficiency generating units slated to go online in 2019.

As for the lease of higher-efficiency Aggreko, LLC units on St. Croix, WAPA Executive Director Lawrence Kupfer said the current rates already take into account those projected savings. WAPA is projected to save $18 million a year from the Aggreko units, which are also scheduled to go online in January, but the savings began taking effect in July.

On the other hand, a Nov. 27 document by Georgetown Consulting, an advisory firm contracted by the PSC, states, “In Commission meetings and conferences WAPA made clear that such a surcharge was a critical portion of the petition and would be based on the debt service schedule agreed to by WAPA for the CDL debt.”

The amount of the surcharge, if any, remains undetermined. The Georgetown Consulting document referenced information submitted by WAPA when the utility was operating under a previous timeline that stated the first payments for the CDL were due in July 2019. Based on that timeline, WAPA estimated a surcharge of $0.005681 per kilowatt hour. The amount reflects $1.54 million in payments due in July divided by 270.74 million kilowatt hours, WAPA’s projected sales for six months.

Now that the payments have been deferred to 2021, the surcharge will have to be recalculated. According to Georgetown Consulting, the firm has “requested but not received a revised calculation from WAPA of the debt service schedule and the proposed modified surcharge.”

Whether or not ratepayers will see a CDL-related surcharge in 2021 is uncertain, but PSC Member Kent Bernier seemed opposed to the idea.

“This base rate increase, there’s no need for it right now,” said Bernier. “This government, with the new administration, has to engage to protect the people of the Virgin Islands. Because our PSC is following law, but this is beyond humanity.”

The discussion on increasing base rates occured against a backdrop of increasing frustration among WAPA clients who claim they are being charged erroneous or exorbitant fees. Mon Bijou resident Antonio Steel said that he has been waiting for WAPA to give him an accurate bill for his home’s electric usage. According to Steel, in April, he was billed close to $1,300 for the period between January and March. Steel said he was told by customer service that the bill was based on an estimate instead of an actual reading.

“This has caused me excessive stress and sleepless nights,” said Steel, adding that he has resorted to turning off his water heater and cable box in an effort to lower his usage.

“My quality of life has been destroyed,” said Steel. “This nonsense has got to stop. Something’s gotta give in these Virgin Islands.”

Kamal Kabui of Frederiksted said his church, the Frederiksted Church of the Nazarene, meets a few hours a day three days a week. He was shocked, he said, when he received a bill totaling $768 for a period of 61 days. When customer service told him the meter was read, Kabui informed her he was going to complain to the PSC. The customer service representative then said she was going to have a WAPA technician look at the meter again, which still has not happened, according to Kabui.

“WAPA needs to go out and read people’s bills because I’m so sick and tired of this estimated thing,” said Kabui. “Something needs to change because people are suffering from this lack of WAPA efficiency with handling people.”

According to Kupfer, he will need to look at individual cases before making any determination. According to PSC officials, WAPA cannot disconnect customers after they have filed a dispute on their electric or water charges.