An idea to combat LEAC
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The people of the Virgin Islands continue to feel the pinch, pain and detriment of the LEAC as it surges dramatically. There seems to be no immediate halt to the cost of power in the territory.
WAPA must employ some cost reduction measures to ease the burden on consumers.
My suggestion for reducing the LEAC is called derivatives. Derivatives is an insurance policy; it is designed for businesses like WAPA that depend on commodities that have volatile prices.
WAPA sells power to residential customers, and when the price of oil goes up, the LEAC rate goes up in turn. Some customers, especially those on fixed incomes such as pensioners, might not be able to afford to pay to light their homes.
To help reduce this problem, WAPA could buy into the derivatives market, which would allow WAPA to buy a kind of insurance policy. If the price of oil shot up, WAPA would receive a payment on the insurance policy and that money would offset WAPA's increased cost, the LEAC. Therefore, WAPA would not have to charge customers with the LEAC. WAPA would effectively have swapped responsibility for a price rise with someone else - rather than WAPA consumers - and could offer Virgin Islands customers a more consistent and lower price over time. That means Virgin Islands consumers will save in times of fluctuations in price.
- Melvin K. Belleau, St. Thomas.