Chain of Events Brings Confusion to Debate Over Utility Rates

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On Wednesday last week, Public Services Commission Chairman Andy Rutnik (pictured above) chaired a four hour marathon special meeting with two agenda items, both pertaining to the Water and Power Authority. 

ST. THOMAS — Regulators with the Public Services Commission admitted at a recent special meeting they don’t like the results of their latest conflict with the Water and Power Authority. But, they said, there’s little they can do about it.

But at the end of the meeting held Feb. 22, the issue of setting a base rate for WAPA utility bills remained unresolved.

Top officials at WAPA put a rate increase in place Feb. 2 without PSC approval. A lawyer representing the utility at the special PSC meeting called that action something he’d never seen before.

Regulators said they could take WAPA to court, but understood they needed the funds to complete a fuel conversion project at the Randolph Harley Power Plant on St. Thomas. If the dispute over the unauthorized rate hike went to court, they said, it could take years to resolve.

It looked, for a moment, like it was resolved on Jan. 12 when regulators approved a negotiated hike in the interim base rate. Then on Jan. 26, at a special PSC meeting the decision was reversed with no prior discussion.

When that happened, the anticipated revenues from an approved rate hike dropped from $40 million to $14.5 million.

PSC Commissioners Johann Clendinen, David Hughes and Raymond Williams said they didn’t like WAPA’s unauthorized rate hike but they may have to live with it.

WAPA Legal Counsel Sam Hall and co-counsel Marie Thomas-Griffith pleaded with regulators to understand their point of view. “It was never WAPA’s intention to act in bad faith,” Hall said. The rate hike was adopted because utility officials felt they needed revenues to keep itself afloat.

But Hall also criticized the board.

Insufficient notice was given to WAPA before the Jan. 26 meeting took place, he said. The vote to rescind the rate hike came without prior discussion. He added that reversing the rate hike challenged the separation of powers between WAPA as the operational authority and the PSC as the funding authority.

WAPA’s lawyer said his client was denied due process rights as a result, an issue that could wind up in court. It was a prospect PSC Chairman Andrew Rutnik did not want to entertain. As untidy as the dispute played out, he said, the panel had to move towards a prompt resolution.

It’s just how the legal issues and the jurisdictional issues interplay, he said. The issues should be separated and resolved.

“Kicking it down the road will hurt St. Thomas. It will hurt St. John and it will hurt the utility. Right now WAPA needs an increase in the base rates. They’re in the middle of a negotiation and they’re having issues on the bond market,” Rutnik said. “I don’t agree with the way WAPA did this, but as attorney Hall said, this is a forty-year process.”

A process, he said, with lots of push and pull between the two agencies, each one testing the limits of its jurisdiction and authority. But, Rutnik said, if the dispute winds up in court, that could last for years.

Clendinen proposed a motion, calling for implementation of an expedited base rate. “I want to just be reasonable with WAPA,” Clendinen said.

But PSC consultants Jim Maddan and Larry Gawlick from Georgetown Consulting said that could not happen quickly. WAPA has pitched at least four iterations of proposed base rates and whichever one was chosen would have to be put through a thorough review. “Basically, right now, we don’t have a plan,” Madden said. 

PSC legal counsel Boyd Sphren reminded commissioners the rate approved on Jan. 12 was an interim rate, with a permanent base rate expected to come in at the end of the rate examination.

Rutnik told fellow board members an interim rate would be the fastest way forward. “Unless we decide on this interim base rate, this issue will go on and on, and on,” the chairman said.

Other commissioners disagreed. They said focusing on the rescinded rate and dismissing other matters raised in the reconsideration request would only result in confusion. Regulators also expressed disappointment that Rhymer was not on hand for the Wednesday meeting.

Thomas-Griffith said WAPA’s director was off island negotiating the acquisition of generators for the Harley power plant. The PSC would also have to approve the agreement, Hall said.

If the panel could wait a few days, they could meet with Rhymer when he returns. At that time regulators could talk about both the generator acquisition and base rate.

After three attempts to craft a motion to restore the interim base rate, regulators decided to continue the meeting on March 8 at 10 am.