The V.I. Water and Power Authority's governing board on Thursday ratified a $3.3 million purchase of 15,000 barrels of ultra-low-sulfur diesel from Borinquen Towing and Salvage, an expenditure WAPA Chief Executive Officer Karl Knight said was necessary to maintain fuel supplies and prevent interruptions in service. The purchase comes as the utility seeks an emergency increase in the fuel charge on customers' electricity bills, citing sharply higher energy costs that it says it can no longer absorb.
During Thursday's meeting, Mr. Knight told board members that the purchase had already been made to ensure the utility maintained sufficient fuel reserves for its operations.
“This is an interim field purchase that we had to make earlier in the week in order to ensure that we can maintain continuity of services,” said CEO Karl Knight. “We always need to maintain an adequate inventory in the fuel tanks, and so this purchase became necessary last week.”
Mr. Knight acknowledged the difficult fuel-pricing environment during his brief remarks in the public session but maintained that the purchase was necessary to protect the continuity of WAPA's operations.
The motion to ratify the expenditure initially awaited a second before proceeding to a vote. It ultimately passed, although board member Maurice Muia voted against the purchase and board member Lynton Scotland abstained. The approval formalized the expenditure after the fuel had already been procured.
The $3.3 million purchase comes amid another sharp increase in international oil prices, driven by continuing conflict in the Middle East and disruptions to energy shipments through the region. Brent crude, the international oil benchmark, settled at $104.28 per barrel on Thursday, October 8, after rising more than 4 percent during the trading session. Concerns about oil supplies from the Middle East, coupled with disruptions to production in the U.S. Gulf of Mexico ahead of a hurricane, contributed to the increase.
Those developments have added pressure to already elevated prices for refined petroleum products, including the ultra-low-sulfur diesel WAPA purchases for its operations. Although Brent crude is not the price WAPA pays for delivered diesel, the broader increase in global energy costs illustrates the financial conditions confronting the authority as it attempts to secure adequate fuel supplies.
V.I. Consortium previously reported that WAPA submitted an emergency petition to the Public Services Commission on October 5 seeking a three-cent-per-kilowatt-hour increase in the Levelized Energy Adjustment Clause, or LEAC, the portion of electricity bills used to recover fuel costs.
At the time, WAPA said fuel prices had risen significantly since its original fourth-quarter filing in July, leaving the authority unable to continue absorbing the difference between its fuel expenses and the revenues collected through the existing charge. Mr. Knight said the utility remained committed to lowering electricity costs over the long term but had to confront the immediate financial pressures threatening its ability to operate.
The proposed increase would raise the electric LEAC from approximately 22.22 cents to 25.22 cents per kilowatt-hour if approved in full. WAPA estimates that a household consuming 400 kilowatt-hours of electricity monthly would pay approximately $12 more per month. Customers with higher electricity consumption would face larger increases, while those using less power would see smaller adjustments.
The request also marks a significant development following the PSC's September 8 decision to maintain the existing LEAC through December 31, 2026. That decision kept the fuel charge unchanged while regulators continued reviewing WAPA's financial filings and deferred fuel costs. Since then, the authority has warned that further increases in fuel expenses are placing additional strain on its finances.
The PSC is scheduled to consider WAPA's emergency petition at its regular meeting on Tuesday, October 13, beginning at 9 a.m. The commission's amended agenda lists the request under Docket No. 702, with provisions for a review by PSC staff, questions from commissioners, public-session discussion and potential motions.
The commission retains authority to approve, modify or reject the requested increase. Until a decision is made, the existing LEAC remains in place, leaving WAPA to manage its current fuel obligations while awaiting a determination on whether customers will be required to contribute more toward those expenses.
