ST. THOMAS – Legislation on back billing is hindering the Virgin Islands Water and Power Authority’s ability to meet operating expenses, said Chief Executive Officer Karl Knight, who confirmed that the Authority was unable to collect over $1 million from a single commercial entity due to the 35-day legislative restriction on back billing borne of a 2020 senate amendment.
“I think the Senate tried to solve a problem, but in trying to solve the problem they made it worse,” Knight said in an interview with WTJX. “We are currently in a state of emergency, brought on, quite frankly, by our fiscal condition and our inability to meet operating expenses at current rates. This legislation hampers our ability to meet operating expenses.”
The legislation on back billing – which allows the utility to adjust a customer’s account for errors – was originally passed in 2012 and prohibited WAPA from back billing customers beyond a period of three billing cycles, or 90 days, due to faulty meters or previous billing errors. However, in 2020, Senator Novelle E. Francis, Jr. sponsored a bill to amend the legislation and shorten the period that WAPA could back bill customers to one billing cycle, not to exceed 35 days.
According to Senator Francis, the bill was intended to bring relief and stability to Virgin Islands rate payers who were experiencing financial hardship due to COVID-19, compounded by significant billing discrepancies.
The legislature passed the bill unanimously, however, it was then vetoed by Governor Albert Bryan Jr., who defended the period of three billing cycles as a reasonable time frame for businesses to correct errors, both in favor and against customers, saying that most errors were not identified until two billing cycles had passed.
“To limit WAPA, or any business for that matter, to only one billing cycle or thirty days to correct an error could be crippling,” Governor Bryan wrote in a statement following his veto.
However, the legislature overrode the governor's veto and passed the amendment shortening the back billing window to its current 35 days.
This 35-day limit has impacted WAPA’s ability to collect from commercial customers, with the utility facing substantial disputes and open negotiations with these larger accounts. And while Knight would not confirm the name, he did confirm that WAPA had been unable collect more than $1million from one commercial entity due to the 35-day back billing limit.
“The errors seem kind of small and marginal when you’re talking about residential customers,” Knight said. “But when you’re talking about large commercial customers, those can be very costly and those end up being subsidized by all the other ratepayers.”
According to Knight, the legislative restriction on back billing – especially when it comes to the commercial accounts – presents a serious problem for the Authority’s cash flow.
“It does have the impact of making it difficult for us to pay our vendors to buy fuel, to buy spare parts, and just take care of some of the operating expenses that we ordinarily would budget for,” Knight said. “There is an expectation, by myself, that if we produce a kilowatt hour of power and we provide a kilowatt hour of power, that we ultimately get paid for that kilowatt hour of power. That’s the only way that that business works.”
Lorraine Kelly, the Authority’s interim chief financial officer, said what WAPA wants is currently the norm for other utilities.
“What we want to be able to do is, again, no different from the telecom companies, no different from other utility companies across the US and the Caribbean,” Kelly said. “We want to be able to back bill for three months.”
WAPA is scheduled to appear before the Senate’s Committee on the Whole tomorrow to discuss extending the territory’s energy state of emergency, and Knight said he plans to use the opportunity to point out some areas in which he thinks the Senate can support the Authority in resolving its fiscal issues, including looking at the back billing legislation.
