PSC cuts LEAC, raises WAPA base rate
Published: June 30, 2012
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ST. THOMAS - The V.I. Public Services Commission took two actions Friday to help ratepayers and the V.I. Water and Power Authority.
First, they lowered the Levelized Energy Adjustment Clause - known as the LEAC - then they granted an emergency base rate increase to keep WAPA from defaulting on its bonds.
The end result?
WAPA will be able to make good on its debt obligations and prevent its bond rating from dropping, and the territory's ratepayers will still see lower bills.
WAPA petitions the Public Services Commission quarterly to adjust the LEAC, which is the method WAPA uses to pass the cost of fuel on to the consumer.
A number of factors are considered before adjusting the LEAC up or down. PSC consultant Jim Madan said while oil prices have been falling, that is not the only consideration.
WAPA recently refinanced a $40 million loan at a better interest rate, he said. The interest payments on that loan had previously been used as a factor in raising the LEAC, so reduced payments should translate into reduced LEAC, according to Madan.
Additionally, the temporary generating unit is up and running at the Harley power plant on St. Thomas, which allows for more efficient operations.
"It's operating well, and it's providing a benefit," Madan said.
The temporary unit will allow WAPA to begin a maintenance and repair program for the other units, which will also increase efficiency at the plant, he said.
He recommended decreasing the LEAC by about three cents per kilowatt hour.
The decrease will lower residential bills and a residential customer using 500 kilowatt hours per month would see the bill drop by about $14.29.
For residential water customers, the LEAC will go from $14.12 per 1,000 gallons to $8.29 per 1,000 gallons.
Public Services Commission members unanimously supported the change.
The new LEAC will be applied to bills issued after today.
After voting to lower the LEAC, the Public Services Commission voted to give WAPA a temporary base rate increase. The base rate increase will be effective Aug. 1 and will continue until full base rate investigations have been completed for the water and the electric operations.
The Public Services Commission approved increasing the base rate to give WAPA $1.5 million per year for water and $8.6 million per year for electric.
With the new LEAC, the increased base rate will add about $5.85 back into the average residential electric bill for a net decrease of $8.44.
For water customers, the increased base rate will add $1.17 to the per 1,000 gallon rate, for a net decrease of $4.66 per 1,000 gallons.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.