The Virgin Islands Water and Power Authority Governing Board voted at a special meeting Tuesday to reestablish its electric system fuel hedge program that seeks to cap a portion of fuel costs, now that\u00a0fuel oil and liquefied petroleum gas (LPG) prices are declining on the world market.<\/p>\n
Fuel hedging is described as a\u00a0contractual tool some large fuel-consuming companies use to reduce their exposure to potentially rising fuel costs. The\u00a0contract allows the companies to establish a fixed or capped cost, through a commodity swap or option.<\/p>\n
Tuesday’s governing board decision authorizes the\u00a0hedging of fuel oil, LPG, liquefied natural gas, and all other fuel sources used by the Authority going forward, according to a press release issued about the the board’s action.<\/p>\n
WAPA’s first fuel hedge program existed from\u00a0July 2006 through the early part of 2011.<\/p>\n
The Authority says it believes that given the decreasing cost of fuel, the time is right to reestablish its fuel hedge program to lock in current market rates for the last two quarters of 2015 and all of 2016.<\/p>\n
“It’s advantageous for us to execute hedges now to lock in the lower prices that will exist for about one-and-a-half years, and will be a great benefit to ratepayers,” said WAPA Chief Executive Officer Hugo V. Hodge, Jr., adding that the hedging will start with small quantities, but will gradually ramp up to 50 percent of the Authority’s volume.<\/p>\n
WAPA said the benefit of its\u00a0hedging program will be recognized in the Authority\u2019s July LEAC filing.<\/p>\n
Hodge noted that while customers are currently receiving a saving in the Jan. 1 through June LEAC, which would reflect\u00a0a portion of the switch to propane expected to fully come online at the end of the first quarter, the July 1 LEAC period will be entirely based on propane.<\/p>\n
The current rate of electrical service for residential customers is $0.39 per kilowatt hour and commercial clients are presently paying $0.42 per kilowatt hour, a decrease\u00a0from $0. 51 cents for residential service and $0. 56 for commercial users as of\u00a0Sept. 2014, according to WAPA.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Virgin Islands Water and Power Authority Governing Board voted at a special meeting Tuesday to reestablish its electric system fuel hedge program that seeks to cap a portion of fuel costs, now that\u00a0fuel oil and liquefied petroleum gas (LPG) prices are declining on the world market.<\/p>\n","protected":false},"author":9,"featured_media":15895,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[854,191,147],"tags":[83],"yoast_head":"\n