The St. Croix Chamber of Commerce has compiled results from a recent survey sent to Chamber Members and the U.S. Virgin Islands community at large related to WAPA electrical service and rates.
On June 7, 2019 the St Croix Chamber of Commerce published their position on the recent rate increase requests WAPA made to the Public Services Commission. The St Croix Chamber is strongly against any additional WAPA rate increases and takes the position that the private sector can no longer be relied upon to bail out WAPA due to the Authority’s and the Government of the Virgin Islands’ mismanagement.
Following press from the publication, in their next meeting the PSC held off any additional rate increase consideration until their July 31, 2019 hearing.
In an effort to illustrate the financial impact an additional rate increase will have on the U.S. Virgin Islands economy, an online survey was put together to gather statistics and comments from both the public and private sector. The survey was sent via email to the St. Croix Chamber Membership and general mailing lists, as well as the press. The link was also shared via social media.
A total of 192 responses were received over five days. The majority of respondents were from St Croix (74.6%), with 18.5% from St. Thomas and 6.5% from St. John. 77% have purchased WAPA services for five years or more; 71% owned their home, while 28.9% rented; 49.5% were business owners or partners, with 13.6% in management, 28.4% listed as employees, 4.3% unemployed and 9.2% listed as “Other” noted as retirees per comments. Approximately 50% of those taking the survey were in the age range of 45-64 years and 56.7% were listed as employed full-time. Respondents’ income reflected a wide range, with 1% listed as having an annual income of $15,000 and under.
Many throughout the survey point to the mismanagement of WAPA over decades and the Government’s failure to pay their bills as the major reasons behind rate increases. With much of the U.S. Virgin Islands still recovering financially from the hurricanes and few seeing increases in wages, the burden of additional rate increases threaten an undue hardship to already cash-strapped households.
“At this point there are still many people struggling. The hurricanes set a lot of people back. The rents went through the roof and people are still (all this time later) looking for reasonable housing. It’s just bad timing,” stated one survey taker.
A statement shared by the Water and Power Authority today on their Facebook page claims that the requested base rate increase of 3% will be negated by a 3% reduction in the fuel surcharge for Residential ratepayers through 2019. It makes no mention, however, of the effect on the Commercial rate (businesses) or what that means for 2020 and beyond as fuel charges fluctuate.
The U.S. Virgin Islands pays the highest rate for electricity in the United States and its Territories, and one of the highest rates in the world. However, an overall rating of WAPA’s services resulted in a 2.2 score “Below Average” on a scale of 5 based on Customer Service and Quality of Service, among other factors. Many praised the linemen and front-line staff but called out management for lack of accountability when questioned about inconsistencies in billing and errors.
100% of respondents who answered feel that WAPA should undergo a forensic audit and that information should be made public.
“The results speak for themselves and are by no means a surprise to the Chamber. Without immediate action by the Government to control WAPA’s costs, our economy will almost certainly regress, with local business owners closing their doors and more citizens fleeing to the mainland. The business community is resilient, but there comes a time when enough is enough and we can no longer sit back and accept the status quo from years’ past. The people of the U.S. Virgin Islands have spoken and will not continue to tolerate continued financial abuse,” concludes Ryan Nelthropp, St Croix Chamber Chairman of the Board
Results for the WAPA survey are being shared with Gov. Albert Bryan Jr., the Senators and Public Services Commission ahead of the PSC hearing. Full results of the survey can be found on the St Croix Chamber website at www.stxchamber.org.
The St. Thomas-St. John Chamber of Commerce has had the opportunity to meet with Water and Power Authority executives a number of times over the past months to learn more about the utility’s short-term and long-range plans to improve service reliability and reduce costs to residents.
WAPA’s three- to five-year plan includes many laudable initiatives, funded by FEMA and HUD, that will improve efficiency and reliability of the grid such as shifting to underground power distribution, installing composite poles on all islands, continuing to shift to more efficient power generation using propane as the primary fuel, and installing over 60MW of solar capacity in the Territory. All these initiatives are expected to reduce the long-term cost to residents but will take time to implement and realize the benefits.
The Chamber supports these initiatives but is gravely concerned that the current debt load ($500 million) and other third-party liabilities ($200 million) put WAPA in a very fragile financial position and jeopardizes its ability to implement these changes. Based on the most recent financial forecast provided to the Chamber, WAPA is expected to generate a $30 million-plus operating loss in 2020, driven largely by a deterioration of customer revenue caused by grid migration (shift to solar, etc.) and hurricane related impacts (hotels being offline, etc.). And since the majority of WAPA’s annual operating expenses are fixed in nature (debt service, fuel and contractual expenses, critical personnel), there is little opportunity for meaningful expense reduction to cure this.
Last, the past failures of the Government of the Virgin Islands (GVI) entities to pay WAPA in a timely manner hurts all of us. The hospitals, until earlier this month, owed WAPA $22.5 million, which essentially shifts these costs onto our residents and businesses. While we acknowledge that the GVI has kept current with WAPA since mid-2018, GVI entities still owe WAPA over $7 million. These amounts need to be paid and the GVI needs to remain current with WAPA.
It is therefore the Chamber’s position that the financial woes of WAPA will not be cured with another rate increase to its customers. Such an increase may temporarily ameliorate the operating deficit, but the ongoing migration of customers off the grid, combined with an unsustainable debt load, will suffocate the utility unless major structural changes are made such as:
• A comprehensive government strategy for the payoff or relief of the debt load must occur — we are supportive of the strategy by WAPA to increase the base rate by $.03 while at the same time reducing the LEAC by the same amount (which is a net neutral or no impact to customers) in order to gain access to more favorable capital markets to facilitate debt refinance.
• A complete road map, with a financing strategy, for efficient and less costly power generation using micro-grids, renewables and other power sources.
• We recommend that investments be made to update systems and processes so that the appropriate information is readily accessible. It is our expectation that basic information can be provided easily, perhaps in real time, and will not constitute an undue burden, which is key to providing a strategic response to the crisis at hand.
We therefore request that the Public Services Commission reject any request for a Net Rate increase until WAPA and the V.I. Government develop a complete plan, vetted by external professionals, to permanently address these issues.