PSC Stands Ground on Electricity Rates Despite WAPA’s Deferred Fuel Cost Dilemma

The Public Services Commission (PSC) recently addressed the Water & Power Authority’s (WAPA) plea to extend the existing electricity rate under the Levelized Energy Adjustment Clause (LEAC), amid discussions about the disparity between WAPA’s fuel expenditures and the costs recovered from consumers.

WAPA’s argument of a burgeoning deferred fuel cost balance could not sway the commission, primarily due to the absence of audited financial statements for recent years. This lack of financial transparency hampered discussions about transferring these costs to consumers, the PSC highlighted.

During a presentation, consultant Jim Madden pointed out that WAPA has requested the maintenance of the current LEAC rate of 22.22 cents per kilowatt-hour until at least June 30. He emphasized that while considering this extension, it’s important to acknowledge the deferred fuel balance for the electric system stood at $18 million as per the latest audited financial statement from fiscal year 2020, nearly three and a half years ago.

PSC Commissioner David Hughes intervened with a reminder that the commission had previously resolved to defer discussions on deferred fuel balances until WAPA submits audited financial statements. A brief discussion ensued, leading to a consensus to hear out the report with the understanding that no decisions regarding the deferred fuel cost balance would be concluded.

Madden expressed that the resolution on how to manage the growing gap between fuel costs and consumer charges depends on guidance from the commission. Yet, Hughes posited that this disparity might not even exist, suggesting that a reevaluation of the calculations could eliminate the deferred fuel balance from WAPA’s financial records. The true state of affairs, he argued, could only be determined through the pending audits.

Clarifying WAPA’s stance, CEO Andrew Smith mentioned that the utility is not seeking deferred fuel recovery at the moment. Subsequently, Hughes proposed, and the commission unanimously agreed, to extend the current LEAC rate into the upcoming quarter.

However, Madden hinted at the looming necessity to address the recorded discrepancies, suggesting that this issue might resurface in future discussions.