Concerns Mount Over WAPA Rate Hike Proposal Amid Rising Solar Adoption

The Virgin Islands Public Services Commission expressed grave concerns on Tuesday regarding a potential increase in the Levelized Energy Adjustment Clause (LEAC) rates proposed by the Water and Power Authority (WAPA). This move, officials fear, may further shrink WAPA’s already diminishing customer base.

During a Senate Committee meeting on Government Operations, Veterans Affairs, and Consumer Protection, PSC Executive Director Sandra Setorie cautioned that raising the electric LEAC could be counterproductive. The LEAC has been held steady since 2022, falling below the actual costs of fuel and purchased power. The Virgin Islands government has been subsidizing these additional expenses, preventing them from burdening consumers. Despite this, WAPA has accumulated around $90 million in deferred balances and is considering applying for a LEAC increase to address this financial shortfall.

Ms. Setorie underscored the potential negative impact of higher LEAC rates on WAPA’s customer retention. The authority witnessed a 30% drop in sales from 2012 to 2017, a trend that might be exacerbated by increased electricity costs. She pointed out that, for many, solar and battery systems are becoming more cost-effective alternatives to WAPA’s services.

The committee, including Senator Ray Fonseca, reacted with concern to these revelations. Mr. Fonseca highlighted the vicious cycle where customer loss leads to higher bills. He inquired about WAPA’s strategies to expand its customer base, to which Ms. Setorie responded that the authority is planning to increase its focus on renewable energy sources like solar and wind to lower energy rates. WAPA’s commitment to this transition has been evident in its recent agreements for wind and solar power procurement.

Boyd Sprehn, the PSC’s general counsel, noted that WAPA anticipates lower operating costs in the future, due to sustainable energy initiatives and the transition from diesel to propane in power generation. These cost savings, he explained, could eventually be passed on to consumers.

Yet, with no concrete timeline for these developments, committee members, including Senator Milton Potter, expressed concern about WAPA’s immediate and long-term viability amidst increasing customer migration to alternative energy sources. Ms. Setorie concurred, acknowledging the risks faced by all power utilities in this changing landscape.

The PSC remains committed to guiding WAPA in integrating alternative energy, despite the slow pace of progress. Senator Novelle Francis raised concerns about the impact on vulnerable citizens who rely on WAPA, pointing out that those who can afford to leave the system are doing so, leaving those with limited means more exposed to potential cost increases. This scenario could necessitate continued government subsidies for WAPA, further straining public resources.