WAPA slams consultant's report
Published: January 30, 2013
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ST. THOMAS - "Grossly misleading, incorrect and counterproductive."
That is how the V.I. Water and Power Authority on Tuesday, in a forceful rebuttal to a regulatory order issued last month by the agency tasked with overseeing the utility's rates, characterizes a consultant's report used to justify the order imposing several new reporting requirements.
In a petition asking the V.I. Public Services Commission to reconsider its December order, attorneys for WAPA present arguments countering a report produced by Georgetown Consulting Group for the Public Services Commission.
Taken together, WAPA's response and petition use the word "misleading" 12 times, "incorrect" seven times and "inaccurate" and "counterproductive" twice each.
The language echoes the same report that the response is criticizing.
The December Georgetown report claimed that WAPA has provided information that is "inaccurate at best and misleading at worst" regarding the territory's soaring electricity rates.
The Georgetown report, coupled with WAPA's response, leaves consumers in a difficult position: Both WAPA and the Public Services Commission consultants are accusing each other of lying to the public about why V.I. residents and businesses pay between 50 and 54 cents a kilowatt hour for electricity.
According to WAPA's petition:
- The commission violated WAPA's statutory and constitutional due process rights by failing to give the utility 10 days prior written notice to respond to issues raised in a Dec. 15 report by Public Services Commission consultants from Georgetown Consulting Group.
"Respectfully, the Commission should not have ignored the Authority's statement at the hearing that its due process rights were being violated nor should it have ignored the fundamental unfairness to the Authority in not being allowed an opportunity to put forward its reasoned response to the GCG report before decision was rendered based on it," WAPA's petition states.
- The Georgetown report contains "erroneous factual assumptions and findings" regarding WAPA's operations.
- The new commission requirement that WAPA meet certain minimum filing requirements before asking for any further increases to the fuel surcharge known as the Levelized Energy Adjustment Clause, or LEAC, is unclear in scope and will lead to unnecessary delays in WAPA collecting the money from ratepayers that it needs to function.
- The Public Services Commission's requirement that WAPA provide "tactical and logistical implementation plans and measures" regarding fuel diversification and energy efficiency "exceeds the jurisdictional authority" of the Public Services Commission, whose powers are restricted to rate-setting.
The petition recommends potential solutions to some of the issues, for instance requiring Georgetown Consulting to respond to WAPA's LEAC increase petitions sooner and to point out to WAPA any missing information well in advance of Public Services Commission hearings.
The petition also asks the Public Services Commission to vacate relevant portions of the order.
Supporting the petition is a 29-page response to the Georgetown report from WAPA that fleshes out many of WAPA's arguments.
Several sections accuse the Georgetown report of misstating facts about WAPA's LEAC, deferred fuel balances and operating efficiencies.
For instance, Georgetown blamed 82 percent of the latest LEAC increase on WAPA's generators operating less efficiently than possible and less efficiently than WAPA routinely predicts. The consultants claimed WAPA burns 50 percent more fuel than an "average" comparable system and 80 percent more fuel than an "efficient" system.
According to Georgetown, that forces WAPA into a situation where it regularly burns more fuel than it is charging customers for in the LEAC. Those unpaid-for fuel balances add up before WAPA has time to adjust the LEAC, and ultimately, WAPA must divert money from maintenance and repairs to pay its fuel bills, further decreasing the reliability and efficiency of WAPA's aging infrastructure.
WAPA's response rebuts that theory, arguing that only 28 percent of the latest LEAC increase is due to this issue. The response argues instead that 39 percent of the increase was due to higher fuel prices, a factor not in the control of the utility company.
The Georgetown report also blamed WAPA for its continued problem with the deferred fuel balances, calling them a condition of WAPA's own making.
WAPA, however, says the deferred fuel balances are rooted in "several actual and estimated factors," including fuel prices, customer demand, line losses and the generating units that are available at any given time.
WAPA "was not in control of all of these factors," the WAPA response states.
WAPA also argues that the efficiency levels used in the Georgetown report are "not achievable" because of the types and sizes of its generators, the effects of environmental regulations, "ambient conditions" and other factors. The response argues that it is "grossly misleading" and "highly inappropriate" to compare WAPA's efficiency potential to industry standards or to other island power systems, such as the one in Guam, because of "significant differences in all of these factors."
WAPA's response also turns the utility's deferred fuel balance and infrastructure problems back onto the Public Services Commission.
"The fundamental issues that the Authority faces and seeks to redress all require necessary funding," the response states. "However, the Authority has been limited, in part, by a regulatory approach that focuses on providing it with the bare minimum it needs to survive."
In the response, WAPA also announces plans to hire two of its own consultants - Public Resources Management Group, Inc., and nFront Consulting, LLC - to help deal with the LEAC filing issues highlighted by the Public Services Commission's consultants.
"The costs of these consulting services will be recovered as a regulatory expense as are the costs of the Commission's technical consultant, GCG," the response states.
- Contact reporter Lou Mattei at 714-9124 or email email@example.com.