Utility Operators, Regulators and Stakeholders Face Lawmakers over WAPA’s Rates

ST. THOMAS — Lawmakers recently had a chance to question the head of the Water and Power Authority about how much it will charge its customers.The Committee on Government Affairs, Veterans, Energy and Environmental Protection met March 10 on St. Croix.

WAPA Executive Director Julio Rhymer told committee members why the utility filed for a base rate increase from the Public Services Commission. The customary procedure for raising the amount WAPA can charge is to seek PSC approval, but a dispute between the two agencies led to WAPA’s board approving a rate hike without the regulator’s consent.

Stifled cash flow left WAPA without enough cash to pay for operations, Rhymer said. The cash crunch was so severe it became necessary to postpone payments to certain vendors. One of those vendors, a former fuel supplier, is now suing the Authority, Rhymer said.

The Committee also heard from WAPA’s management team about the proposed base rate increase, the status of the Smart Meter program and meter reading practices.

Elizabeth Armstrong, the Chairwoman of WAPA’s Board of Directors and officials from the Public Service Commission appeared at the March 10 hearing as well.

Gov. Kenneth Mapp brought the warring parties together for private talks a few weeks ago. The PSC had approved a hike in the base rate for WAPA, but held a special meeting days later and partially rescinded it.

The action taken by PSC stunned investors, Rhymer said. In so doing, the Moody’s Investor Services downgraded the electric system senior and subordinate electric system revenue bonds.

Regulators say WAPA was already authorized to charge more but the funds they received were being spent on priorities the PSC had not approved. The dispute arose as a hearing examiner is still in the midst of issuing a finalized base rate recommendation.

Rhymer named several factors that led to WAPA diverting funds approved to upgrade its generators. Declining sales, large government receivable and increased cost of operation headed the list. About $14.5 million was needed for continued support of the day to day operation.

In her testimony Armstrong said WAPA’s financial outlook is directly tied to the revenues generated by the rates it charges its customers. She added that by the end of this year or early 2018 the first set of new generators are expected on island.  As installations and upgrades continue over the next several years, WAPA will bring in reliable, efficient generation capacity to the Harley Power Plant, she said.

Armstrong told lawmakers the WAPA board believes that its plan to improve power generation provides gives WAPA a chance to improve and continue on its mission to provide the lowest cost, safest and most reliable power to consumers.