Government
PSC Decides to Hold Electric LEAC Rates Constant Until Year’s End
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The Public Services Commission (PSC) announced its decision on Tuesday to preserve the current electric Levelized Energy Adjustment Clause (LEAC) rate at 22.22 cents per kilowatt-hour. This decision, which was nearly unanimous with Commissioner Andrew Rutnick abstaining, implies that until December 31, 2023, residents of USVI will be charged 40 cents per kilowatt-hour for the initial 250 kWh, escalating to 43 cents thereafter. In contrast, commercial users are billed at a flat rate of 43 cents per kilowatt-hour.
This ratified rate, effective from October 1, 2023, was endorsed during a standard meeting steered by Vice-Chair Pedro Williams, as Chairman David Hughes was absent. Despite the unanimous vote, Commissioner Rutnick chose not to participate.
The Georgetown Consulting Group’s Jamshed Madan presented data that played a role in the Water and Power Authority’s (WAPA) late-July preliminary filing. This filing estimated the LEAC rate at a higher 23.90 cents per kilowatt-hour. This surge was attributed to anticipated hikes in oil prices, projected to escalate from $2.44/gallon in 2021 to $3.14/gallon within the specified forecast period. Alongside, the cost for LPG deliveries has surged, exceeding the PSC-endorsed 33 cents/gallon rate. Despite these economic pressures, WAPA has opted not to advocate for a rate exceeding the current 22.22 cents at the moment.
An intriguing element shared by Madan was the non-inclusion of four Wartsila generators in WAPA’s recent documents. Procured in 2021 and commissioned in August, these generators, Madan argued, should have been integrated into the energy cost projections. Offering more clarity, WAPA’s Executive Director, Andrew Smith, indicated that the infrastructure essential to operate these units using propane wouldn’t be operational until mid-November. Madan emphasized that incorporating propane might have led to a LEAC rate even more competitive than the current 22.22 cents.
Looking Ahead: LEAC Review Recommendations
Madan proposed that the PSC retain the prevailing LEAC rate for the upcoming quarter, while also expecting an updated filing for the January-March 2024 span by October 15 of the current year. He further proposed transitioning to a biannual LEAC assessment, to be updated every April 1 and October 1, in lieu of the current quarterly revisions. Despite this, WAPA would remain legally obligated to provide quarterly updates but could request mid-term rate adjustments if required.
Chairman Hughes expressed the need for more comprehensive discussions concerning the LEAC rate review frequency—whether to continue quarterly or move to a semi-annual system—as well as other consultant inputs, to be discussed in future meetings.
In conclusion, despite pressures from anticipated oil price hikes and LPG delivery rate increases, the PSC’s decision leans towards maintaining the LEAC rate.
Government
Medicaid Funds Depleted, Major Road Repairs Planned: Bryan Provides Wide-Ranging Update
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Governor Albert Bryan Jr. addressed several critical issues during Monday’s press briefing, focusing on infrastructure, housing, community welfare, and healthcare in the Virgin Islands.
Road Conditions and Repairs
Governor Bryan discussed the impact of recent weather on road conditions, particularly on St. Croix. “The rain, we’re grateful for it but it wreaks havoc on the roads,” he said. The wet weather has also accelerated vegetation growth, complicating roadside maintenance efforts. Additionally, some road projects have been delayed due to ongoing underground utility work. The North Shore Road will undergo significant work to install underground electrical and water services, while Mahogany Road and the main roadways in Frederiksted – Queen and King streets – are slated for extensive resurfacing. “We should be starting within the next 90 days or so to do that,” Bryan estimated.
Housing and Legislation
The governor emphasized the need for affordable housing and the aesthetic improvement of downtown areas, highlighting legislation on abandoned and derelict buildings. “We need to move this along and increase our affordable housing in our downtown spaces,” he stated. Bryan also addressed proposed sentencing reforms to give judges more discretion based on crime severity, saying, “We want to make sure that we have the appropriate amount of punishment for the crimes.”
Additionally, bills regarding gender changes on official documents, procurement requirements, and the combination of workers’ compensation with unemployment insurance are under legislative consideration.
Healthcare Funding and Medicaid
Healthcare funding was a key topic, with Bryan disclosing a recent bill requesting $3 million for Medicaid matching funds. “We ran out of Medicaid match money,” he said, noting the expansion of services during the Covid-19 pandemic led to increased demand and the subsequent depletion of funds. He emphasized the importance of maintaining access to affordable healthcare, highlighting the recent health fair that serviced over 2,400 residents.
Labor Shortage and Immigration
Addressing the territory’s chronic labor shortage, Bryan noted political challenges around immigration and visa waivers. He mentioned efforts to create work visa nexuses with the Dominican Republic and referenced an agreement allowing Trinidadian investors to settle in Miami as a potential model. He expressed confidence in meeting labor demands for upcoming projects under the Rebuild USVI initiative, stating that the four qualified bidders are already preparing to bring in workers.
Governor Bryan’s briefing provided a comprehensive overview of the challenges and initiatives aimed at improving the Virgin Islands’ infrastructure, housing, healthcare, and labor markets.
Government
Governor Bryan Urges Immediate Ceasefire in Gaza Strip; Proclaims USVI-Palestine Friendship Day
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Governor Albert Bryan Jr. joined a global chorus calling for an immediate ceasefire in the Gaza Strip during Monday’s Government House press briefing.
The governor took this occasion to introduce Siri Hamad, a new public liaison for the Middle Eastern community. Hamad, a former member of the Public Services Commission, has collaborated with nearly every governor over the years, according to Governor Bryan.
Governor Bryan highlighted the significant contributions of the Palestinian community to the Virgin Islands’ development. “We are on the fourth generation of Palestinian descendants,” he said. “They are a critical cog in our business sector and part of the fabric of our community.”
Reflecting on the history of Palestinian entrepreneurs in the Virgin Islands, Bryan reminisced about the iconic traveling salesmen, who were pioneers in extending credit to their customers long before credit cards or bureaus existed. These businessmen were instrumental in shaping the local economy. Today, their descendants are recognized as Virgin Islanders of Palestinian descent, fully integrated into the community.
In a gesture of solidarity, Governor Bryan announced that November 29, recognized globally as the International Day of Solidarity with the Palestinian People, will also be celebrated as Palestinian Virgin Islands Friendship Day in the U.S. Virgin Islands.
Governor Bryan emphasized the universal desire for peace amidst global turmoil, stating, “As individuals, regardless of our skin color, origin, or religions, we should all want peace in this very tumultuous world.”
Government
USVI’s New Budget Strategy Aims to Address Revenue Shortfalls
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The FY 2025 budget cycle commenced on Thursday as Senator Donna Frett-Gregory convened a hearing of the Senate Committee on Budget, Appropriations and Finance. Officials from the Office of Management and Budget presented an overview of the proposed executive budget for the upcoming fiscal year, themed “Fulfilling the Promise of Fiscal Solvency.” The proposed $1.44 billion budget includes a general fund allocation of nearly $897 million.
“Within the proposed general fund fiscal year 2025 budget of $896,803,010, you will find a continuation of the prudent and conservative approach we have employed since 2019,” stated OMB Director Jenifer O’Neal. This figure represents a $77 million decrease from the current general fund appropriation, resulting from the elimination of several one-time obligations and a reduction in the wage adjustment line item, O’Neal informed lawmakers.
The total budget of $1.44 billion also includes appropriated funds of $97,949,177, federal funds of $416,839,994, and other “non-appropriated funds” totaling $28,970,041.
According to O’Neal, the OMB has adopted a “cautious strategy” to produce a balanced budget that aligns with the estimated revenues for FY2025, aiming to ensure financial stability and resilience amid potential uncertainties. “Our commitment to conservative budgeting reflects our dedication to enhancing financial management and sustainable growth for the territory,” she said.
Despite current revenue shortfalls as of the third quarter of FY2024, the OMB’s projections anticipate growth in several categories. Personal income tax is expected to increase by 9% to $502.3 million, while corporate income is projected to rise by 23%. “With the launching of billion-dollar bid packages and the expected increase in construction activity, we project a significant increase of $19 million,” O’Neal explained.
Gross receipts are also expected to increase by 9% to $214 million, largely due to increased project bundles and construction activity. Excise taxes are projected to rise by 6%, from $42 million to $44.3 million. Notable revenue increases are also projected for hotel taxes.
The digital budget book indicates that the bulk of the FY2025 budget—$728,297,626—will be allocated to the general government. Public housing and welfare will receive $274,372,090, and education expenses are slated to receive $215,026,922. Health and Human Services will be allocated $65,010,796.
In her testimony, O’Neal highlighted several proposals from the FY2025 budget, including additional funds for the territory’s hospitals and the V.I. Waste Management Authority. These increased appropriations will ensure that “vital utilities are adequately budgeted for and can continue to meet the needs of our residents without falling behind again on their utility bills,” she said.
The $5 million budgeted for territory-wide road repairs underscores the commitment to enhancing transportation infrastructure and promoting economic development. An additional $5 million will be allocated to the Budget Stabilization Fund to maintain a prudent fiscal reserve, ensuring stability amid unforeseen challenges. New in the upcoming budget is extra funding for the Department of Sports, Parks, and Recreation for the operation of the recently recommissioned Clinton E. Phipps Racetrack.
Responding to Senator Novelle Francis, O’Neal announced that approximately $400,000 is allocated for the racetrack. “It’s been out of commission for quite a long time and had never been included in Sports and Parks budget,” she explained. The funds will cover utilities and personnel until a promoter takes over the management of the track.
For the Office of Management and Budget, the new budget represents a milestone in their commitment to transparency, accountability, and the prosperity of the territory.
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