PSC heeds court's order on LEAC challenge
Published: January 28, 2012
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ST. THOMAS - The V.I. Public Services Commission will file a draft policy in V.I. Superior Court on Monday specifying how the commission determines LEAC rates to comply with a judge's order.
A Superior Court judge presiding over a legal challenge to the Levelized Energy Adjustment Clause on Jan. 12 gave the Public Services Commission 15 days to detail why it authorized an increase in the LEAC in June.
The Public Services Commission board met Friday and approved a policy that it considers a more thorough rationale for LEAC changes.
V.I. Superior Court Judge Harold Willocks issued a memorandum that concluded the Public Services Commission's basis for that increase was "woefully inadequate and cursory at best."
In an order accompanying the opinion, Willocks remanded the matter to the Public Services Commission to make appropriate findings within 15 days.
Willocks warned that the Public Services Commission's lack of a "blueprint" of the costs that fuel LEAC fees could damage the regulatory agency's public credibility.
The Public Services Commission policy asks the court to heed the commission's need for flexibility in setting the LEAC as the V.I. Water and Power Authority's demand for fuel may change as WAPA adapts less fuel-hungry means of water and electricity production.
WAPA's shift to reverse-osmosis water production, which relies on no direct fuel source, is among the Public Services Commission's rationale for LEAC rate flexibility.
The policy draft, at a minimum, requires WAPA's LEAC filings to include:
- A cover letter that details the LEAC change, including the estimated impact to ratepayers. The letter must explain WAPA's status on deferred fuel balances - those balances accrued when fuel costs rise more than the standing LEAC can cover. In addition, the cover letter must explain how operations changes, such as outages, boiler failures or significant shifts in revenues, affect WAPA's operating budget. The letter requires WAPA to disclose hedging contracts - contracts that set oil payment ranges across a specific time frame.
- Historic and projected workbooks for two fiscal years. The historic workbook would require WAPA to file every LEAC change until it is consistent with a financial audit, which is usually six months or more after a fiscal year's end.
The projected workbook would calculate the proposed LEAC factors for the coming fiscal year.
- An electric system summary would be required for the disclosure of the utility's costs associated with generating electricity. Any new costs would have to be explained in the cover letter.
- A water system summary would be required so WAPA discloses identified costs for all contracts, including the reverse osmosis contract, "if it wants recovery of this and future contract costs" in the water LEAC, according to the draft policy.
Board Chairman Donald Cole, and board members Thomas Jackson, Verne David, Sirri Hamad and Elsie Thomas-Trotman attended Friday's meeting.
- Contact reporter Michael Todd at 714-9104 or email mtodd@dailynews.vi.
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