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Cost of Oil

WAPA LEAC Rates Go UP Nearly 25 Percent

WAPA director knows LEAC hikes hurt, says they’re necessary

By KAREN HOLLISH (Daily News Staff)
Published: March 24, 2011

ST. THOMAS – The V.I. Water and Power Authority knows the impending power bill spikes may hurt those who are on fixed incomes or struggling to run businesses, executive director Hugo Hodge Jr. said Wednesday.

But Hodge said increases to the Levelized Energy Adjustment Clause, which the V.I. Public Services Commission approved about midnight Wednesday morning, were necessary because of sharply rising oil costs.

“It’s been a roller coaster,” Hodge said.

Starting April 1, ratepayers’ electricity bills will increase by 23.3 percent. This means the average residential customer – defined as someone who uses 500 kilowatt hours a month – will see an increase of about $39.15, Hodge said.

At the same time, ratepayers’ water bills will decrease by about 6 percent. The bill of the average residential customer, considered to be someone who uses about 2,400 gallons per month, should decrease by about $4.35, Hodge said.

The LEAC rates passed by the PSC differed just slightly from those for which WAPA petitioned, the PSC said.

The LEAC is how WAPA recoups the cost of fuel oil directly from the consumer.

Asked Wednesday if he expects the LEAC to go up again on July 1, Hodge would not say yes or no. He said most projections for the next few years show the price of Brent crude oil will go as high as $120 a gallon before it goes go back down to under $100. Hodge said this up-and-down trend is expected to continue before the super-high prices stick.

“We have got to get off complete dependency on oil prior to this thing going through the roof and staying there,” Hodge said.

Hodge said WAPA is pursuing ways to wean itself from using oil. WAPA is studying a possible utility interconnection with Puerto Rico, the potential for wind power systems and the logistics of converting the biggest generators on St. Thomas and St. Croix to run on oil and natural gas, Hodge said.

During Tuesday’s meeting, some PSC members asked WAPA if it consumes more oil than necessary.

“The issue here is efficiency,” PSC member Sirri Hamad said. “Can you tell us how efficient WAPA is?”

Hodge countered that the issue is not solely efficiency.

“The issue here is more the cost of oil,” Hodge said.

Hodge went on to say that ongoing renovations to the Randolph Harley Power Plant on St. Thomas will be finished within 9 to 12 months, after which the plant’s overall efficiency is expected to improve.

– Contact reporter Karen Hollish at 774-8772 ext. 304 or e-mail

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