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VI UPDATE U.S. Virgin Islands Public Records TRANSCRIPT OF PUBLIC PROCEEDINGS PSC Regular Meeting - Regular Session Public Services Commission (PSC) recording published June 10, 2026 · 2.5 hours · gov Source recording https://youtu.be/9r6_2rDQi28 Status This is NOT the official transcript. 3 V.I.C. § 884 requires the agency itself to make a verbatim record of its proceedings and reduce it to a transcript within sixty days. This is a working transcript produced by machine from a recording of the proceeding, offered as a finding aid. Transcribed by VI Update, using OpenAI Whisper large-v3-turbo, run locally. Not reviewed by a person. Reliability Automatic transcription, UNVERIFIED. Verify every quotation against the recording before relying on it. Speech recognition splits spoken digits and wraps figures mid-number, so a dollar amount, a vote count or a bill number can be wrong in a way that reads as correct. 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Please copy it, quote it, index it, train on it, republish it, mirror it, sell it. Redistribution is the point: a public record with one copy is one fire from gone. No permission is needed, and none is ours to grant or withhold. So you're not here. That's the one I wanted to do. Yes. Hello. So Raymond. Yes, sir. On your motion, we'll still do, she'll, she'll do the consent agenda. And then she's going to hand over. LEAC and then ferry boats to me, right? Thank you very much. 0:00:00 Hughes. Yeah. Hughes. Text me. Text me. Text me. Yes, sir. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. 0:00:33 Thank you. Okay, this is Commissioner Laura Nichols-Samps. 0:05:25 We just finished the executive session, do you need to do a roll call? no we had somebody that just came he wasn't here when we went into the session right no i'm not going to go right he just he's here now okay well i'd like to acknowledge uh commissioner mcgrath has joined us and the next thing on the agenda is the consent agenda can you please report what took place in executive session um we discussed pending litigation and offered legal advice on pending matters no final actions or decisions were taken in executive session thank you attorney spring now the next thing on the agenda is uh number two consent agenda who speaks on that good morning brenda connor accounts maintenance officer this morning we'd like to enter assessments on the following documents that is 556 by tell the universal service fund certification 130 dollars and that is 669 broadband bi application for etc designation in the amount of 260 dollars Okay, so at this point I'm going to relinquish my chair to chair David Hughes for the The renumbered items, number four, the new numbers, three and number four. 0:06:15 Thank you, Vice Chair Nichols Sams. This is Chair Hughes. We're going to take up new item, I guess it would be three, energy matters. Docket 702, the WAPA Levelized Energy Adjustment Clause. This comes to us in two parts. the first is a discussion a filing of liac for the period july 1st 2026 to september 30th 2026. it's incumbent upon the commission to set this rate wapa has made a filing would staff care to make its report on the filing uh yeah so we have staff we have mr julius wright mr brockman and mr courtney mark online mr wright i believe will offer our first comments good morning mr wright and uh and welcome to the commission good morning mr please proceed good morning mr chairman and 0:08:17 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 1 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session fellow commissioners i want to thank the commission first all for uh having their trust in us this has been an interesting project and let me give you a little bit of background about how we went about our business first we had a lot of catching up to do since we have not been working on island and weren't familiar with WAPA I lived there and I knew of them but had never worked with them and early on we established a methodology where we looked at the the whole project and broke it up into several sections those section included the minimum filing requirements the load forecast of model engineering inputs fuel and transportation costs generation operations and the related liac rate development deferred fuel and then the water related liac cost early on as we were doing our investigation we were at a number of reports anything from news media to other consultant reports the past orders of the commission and several several issues started coming to light that we thought needed to be further investigated that went beyond the LEAC and we called those strategic issues and we broke those down into both operational strategic issues and general management issues and they're detailed in our report in chapters 10 and 11 and we think we made a number of recommendations regarding those strategic issues and how we think they should be looked at further in the uh rate case as as far as our report itself we stand ready to discuss it or answer any questions the the major recommendations that we have number one is that we think that we the commission should accept LEAC's uh offer to keep the LEAC rate at 22.22 cents per kilowatt hour there are a number of reasons for this but the primary one being that the issues in Iran and the increase in fuel costs leads us to conclude they're going to under collect probably for sure in the third quarter of 26. They probably under collected in the second quarter of 26. In the information that we have, they over collected in the third and fourth quarter of 25 and probably in the first quarter of 26 to the tune of around 15 million dollars. That should have been applied to their deferred fuel balance that they were carrying forward. Mr. Wright, if I could stop you, that's going to be a topic of discussion here in just a moment. I'd like to go ahead and dispense with the actual current rate setting process. We have a second piece of this, which is going to deal with things like the deferred fuel account, how we're going to handle it and the accrued deficits or surpluses that have occurred in the last three quarters. So let's stay on the topic of setting the rate and your report regarding that. 0:10:50 Okay, and with respect to that, we think keeping the rate where it is is the better way to go forward. WAPA, as we all know, is cash strapped. We believe they're certainly going to under collect their fuel in the third quarter of 26 even at the 22.22 cents per kilowatt hour however once the issues in Iraq or in Iran rather begin to be dissolved we see their indications the fuel prices are already beginning to come down the diesel fuel prices so we believe this will this will help WAPA get back on track in terms of of having much lower under collections towards the end of the third quarter of 26 also we think that because they are so cash strapped it it's it's not in the best interest of the customers the commission or the company to uh to leave them in such a situation that that they can't pay their vendors and and collect their fuel cost so that's why we're making the recommendation we're making at the same time we have another a number of other recommendations for example as it relates to the deferred fuel balance which you mentioned and also we think that one of the major recommendations we would make is and one of our findings was that WAPA they've got the four new phase two or cell units they have been struggling to convert those to to be a dual fuel unit in that struggle we found out that they are intertwined in terms of how they operate and one of our recommendations is that we think WAPA needs to tell the commission within 20 days if how and how much it would cost to segregate one of those Wartzilla units if they're still having the problem trying to switch them to LPG and take one unit and keep trying to convert that to LPG but it is much cheaper to burn the new Wartzilla units running diesel fuel than to continue to try to run on LPG and in its place run unit 15 because unit 15 is so inefficient compared to the new Wartzilla units. So that's one of our other primary recommendations that if they could somehow segregate one of the Wartzilla units, keep trying to run it on LPG, run the others on diesel, up to a diesel cost probably in excess of five dollars it's cheaper to run that than to run unit 15 on diesel or lpg 0:12:14 mr wright does that assumption or is that recommendation um calculate that wapa has the generation capacity to leave 15 off if it's pulling off a potentially pulling off a wartzilla as well yes they based on what we we were able to see they they have enough capacity in in the seven wort cella units to to do that yes and maybe in addition to unit 27 if that's come back to us if it comes back yes we will try and remember to uh include that that piece of your recommendations um from your report in any motion we make today i have a question go ahead in that process in the consideration of that i mean proper um how does that how does the fact that the consistent power outages um amongst the varying available well among the units how does that factor into um the whole discussion here does that have any bearings on the work that you're doing yes and and yes and no and let me i would refer you to section seven of our report we dove into the major outages on all three islands uh over the last year generally speaking we found that there were a couple of issues that need to be further investigated uh and those involve things like the nox pump i think it's on unit 27 it's gone out and why it's hard to get get those parts online or get it back up to speed those type issues are going to take more of an engineering type of approach and study but the problem we the thing that we saw is wapa's main goal should be to keep the lights on and so far they they've been swamped just trying to do that and issue after issue keeps coming up and the the main problems that that i 0:14:57 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 2 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session found was that for whatever reason the wartsilla units have just not operated the phase to as they should have now whether they are were misspecified whether they uh whether they were promised something that that couldn't be done that remains questions to be seen but the wartsilla units once they were specified they're the first ones that wartsilla had ever built to do an lpg diesel dual fuel type they had done lng and diesel but not lpg so i mean it's i don't know i don't know all the issues there but i think that bears further discussion or further investigation chip there there's this larry brockman there's a fairly extensive analysis of all those outages as you say in i guess it's chapter seven which yes which you can read you know the commissioners can read if they're really interested in each one of them we we go into detail giving our sort of opinion on you know whether or not WAPA was responsive and responsible and you know so on so I think you know that's where you would look to see all those outages chapter 7 of our report Mr. Brockman just because we got a lot of new faces today so if you would just also just take a second introduce yourself to the Commission please oh okay my name is Larry Brockman I got my degree in engineering of mostly electrical engineering I went to work out of school for a small municipal utility in Florida and did distribution transmission and generation planning I went from there back to grad school for a while and then I went to the Public Service Commission in Florida worked there five years then I came up to Atlanta to a little company called energy management associates we wrote production costing simulation software as well as financial simulation software for utilities I was in their consulting department I've got I guess I've done about 30 years worth of expert testimony on revenue requirements cost of service planning and that sort of thing so that that's my background thank 0:17:25 you while we're doing that we've got mr. Courtney also with us today again new face mark could you take just a second and give us your introduction and background, please. You're on mute. Courtney, we can't hear you. Oh, sure. Thank you very much, Chairman Hughes, and good morning, commissioners of the PSE. My name is Courtney Mark. I'm a graduate electrical engineer with specialty in the area of electrical power systems, generation, transmission and distribution i worked for 37 years with the trinidad and tobago electricity commission it is the largest power system in the caribbean with a peak demand in excess of 1400 megawatts with an installed capacity of over 2000 megawatts comprising generation of simple cycle gas turbines combined cycle and notably in the island of tobago which is connected to trinidad via an undersea cable, we have four Wattcilla reciprocating engines in that plant. So I am familiar with Wattcilla, I'm familiar how they configure their power stations. I can understand some of the issues faced with WAPA and I headed the technical department in TNTech. I was the chief technical officer and for many months acted as the general manager of the electricity company i also had the interface with the regulator so i'm familiar with regulatory matters i'm familiar with the role of the regulator in the in the utility sector and how they relate to the national public um if you have any further questions for me i don't want to take up too much time thank you very much for the opportunity thank you sir let's continue down the line with the commissioners for questioning of of the consultants um raymond williams any further questions um i can come back to you yeah okay commissioner mcgross good morning 0:19:31 uh yes i just um i'm interested as to whether the consultants took any time to look at the cut the watsilla contracts in terms of their requirements no we did not look at those contracts but that is one of the strategic issues that we identified that need to be further investigated as a former commissioner and i was in process engineering and large chemical plants for 12 years that's my background and i was a utility commissioner it it's a puzzlement to me that the that the citizens of the virgin islands don't have a system that operates better and that those units are not operating better as i said they were the first of its kind that warzilla had built so looking at those contracts needs to be something that is done to find out what was promised what's been delivered and whether or not there's any issues there thank you if i could just um assist with the response to that question please we had the experience when we were installing four whatsoever machines in the island of the and there was a delay in commissioning also there were defects during the the construction what i can say is while we did not see the contracts from my experience we invoked provisions that contract there were remedies for defects during construction and there were certain liquidated damages for delays in meeting the completion times i would expect that any contract of that nature should have similar provisions in the contract would have also dispute resolution I'm very, very familiar with generation contracts. I've negotiated five generation contracts for billions of dollars with all the generators coming into Trinidad and Tobago. And we have all had provisions to protect against risk associated with delays. That's my contribution to what the contract ought to provide for. i would suggest to this commission that um maybe we ought to have the consultants take a look at the contracts as well because i think that's where some of the problem lies 0:21:47 i would agree with that i think courtney is is right on and that's something that's actually one of our recommendations on the strategic issues that that we need to do some investigation of that contract and look at the guarantees and look at what has happened. It's a puzzlement to me as a former commissioner why there aren't some financial responsibilities of Wartsella on all these issues. Gentlemen, when we just remind a discussion we had in executive session, we're not going to burden the billing of our consultants here any more than is necessary during a period of reduced cash flow on 0:24:21 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 3 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session assessments. So it's a great recommendation. It's going to have to wait until we can afford those additional billings. So we'll take that up when we get some clarity. Don't want to have you working and not getting paid. Commissioner McGrath, any additional questions? I'm good, thank you. Commissioner Nichols-Sams. No, I don't have any questions, thank you. I had just two questions. Gentlemen, you're aware in the LIAC calculation, I think, because I thought I saw the numbers, about our prior orders, which by order limit the non-rev production, kind of the inside the fence production losses, I believe to 2.5 percent. and line loss, which we define loosely as any non-billed revenue outside the fence, I believe is 6.6 is the limit that we've set for WAPA to be able to recognize in LEAC. You're aware of those prior orders? 0:25:13 Yes. And those were implemented in your recommendations in terms of the calculation? Yes. WAPA, in their filing of June the 3rd, made three different scenario runs. one included that that level of production and line losses the other two had a higher level of production and line losses one of our recommendations on I think it's on page 15 of our report maybe on page 14 I'll have to 14 or 15 is that WAPA be instructed to do a study on those production line losses so that we have some updated information regarding what they actually should be WAPA indicated to us that the two and a half and six point six percent were an optimistic number they didn't think they were really correct Chip on on page six on page six of our report there's a nice table that summarizes those three scenarios that WAPA did that the commission may want to look at it sort of summarizes the easy to look at so yeah I've seen the table I bring it up just to note that those are orders of the commission and any recommendations that you make needs to incorporate them. I appreciate that WAPA does other calculations for our information, but our LEAC rate preclude including additional line losses in the calculations that you make for us. So those are still firm orders. They were arrived at, by the way, in consultation with WAPA years ago. Nothing's really happened that shouldn't have actually improved those numbers over time. And WAPA is, of course, working on a new AMI system, which should finally allow them to get some control over the non-revenue billings that are occurring, particularly in the St. Croix District. So we're kind of waiting to see this new AMI system in, which will allow them to identify those sources of loss for production. Again, you guys are new, and this is a long, long topic that we've had around for a while, but that's kind of where we're at with that. 0:26:08 we'll take a look at those numbers when WAPA can identify where those losses actually occur. They can't do that in their current current metering environment. I'd like to acknowledge Senator Carla Joseph has arrived, so if she has any questions as well. Commissioner Joseph, welcome. Good to see you here. Thank you so much, Mr. Chairman, and a blessing of the day to everyone. i do have one question and this is going to be directed to consultant mark i noted your introduction you mentioned that you are familiar with warzilla the wasillas that is operating in tobago i gather they're still in operation correct great are they dual fuel or they just primary one fuel because the last four or what's the list that we have our dual fuel fuel lng they were on on natural gas not liquefied natural gas it is a difference but gas system in trinidad sends the gas not a liquid sends the gas to the machines and that gas is then changed to burn together with diesel so in tobago which is a technology what ciller is very very familiar with their top of the game with that that natural gas is methane methane is a combination of carbon and hydrogen in the case of the virgin islands you know burning a liquid fuel propane and the propane chemistry is very very different from the methane chemistry and there are certain processes that have to take place to allow that to burn so when when our our lead consultant dr wright speaks about the first time they are doing 0:28:15 it yes the term dual fuel is not familiar is very familiar to towards seller but the combination of fuels that are being burnt is very very first on the island okay and so in your and i want to stick on that topic in your experience and knowledge base mr mark and other consultants you could chime in has what sila um have an experience in burning the type of dual fuel that they burn here in the virgin islands because based on what you've mentioned uh mr mark in tobago they don't seem to have an issue because it's actual uh substance that you are you're burning in in trinidad and tomaga which now here this is more propane that is that is correct but what i should also point out regardless of what technology is using under the contract is a certain testing protocol when generating plant is commissioned when the plant is commissioned first to begin there's an off-site visit of the plant there is a factory inspection the plant is assembled in the factory and inspected you go and you visit your plant to see your machines when the plant lands in your island there's an on-site inspection which has to be signed off when the plant is assembled and commissioned there are a number of protocols and tests that this client must see and sign off the final commissioning tests and the test certificates is the sign of that gives the contractor installation responsibilities at that clock starts and the defect liability period kicks in any defects under defect liability period can account for liquidated damages the remedy 0:30:16 factored into the contract and trigger a dispute resolution i'm very very familiar with how these contracts are negotiated how they are structured and how they are managed very very familiar okay i understand that clearly um just as commissioner mcgrass has stated you do need to see our contract that was negotiated uh with waxilla because since it's commissioning we've been having uh some major challenges with the last four watsillas and those are the one that has a 0:32:16 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 4 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session dual um and the dual uh energy source is not similar to what happens in tobacco thank you so much for being here senator joseph to take up your question a little bit further and maybe just for the interest of the public um i think it's important to understand that when we talk about dual fuel a lot of people think that that's a really bright idea because you can burn diesel or you can burn in our case um that actually is not what these engines do they only dual fuel in the sense that they have to have diesel and lng to burn not lng lpg to burn propane so these were to answer your question to my knowledge the only three engines that orsilla has ever produced and they were somewhat experimental and they're clearly not working out very well and they have not sold another engine of this type to anybody since so they were probably ill-advised as a purchase by WAPA because they were unproven and they've proven to be so but in answer to your question there is no one running this engine anywhere that I am aware of because they haven't sold another single one to another entity they are not true traditional dual fuel in the sense that they give us a flexibility to use either of our fuels. They actually lock us into the opposite position, which is we have to have both fuels to run them efficiently. I hope that makes sense. I am totally aware of that, and I believe you have another commissioner who has a question. Let's stay with Mr. Mark here for just a minute. And I just want to make a very fundamental point because you did raise the issue of losses and you did recap that you believe and you quoted correctly that the production allowed production loss is 2.5% and the allowed transmission losses are 6.6%. But I just wanted to point out, fundamentally, that 2.5% is now based on the units sold. In other words, if the units sold were to vary, that 2.5% allowable production loss will vary. And fundamentally, that is wrong. In principle, that is wrong. 0:34:26 You do not base losses on energy sold for this own use, for this production loss. It is based on the capacity of the plant. There's a certain relationship between the capacity installed in the plant and the production for energy. It does not depend on the unit's soul. That energy used in production is to supply the auxiliaries, a number of auxiliaries in the power station. I'll be happy once certain things are put in place to give you an extensive report, to make an extensive recommendation through julius rights and associates on what that how it is calculated what it ought to be one thing i can say to this commission for certain it is not based on the unit sold thank you mr mark i'm gonna finish my questions because i was uh i was interrupted by the entry of the senator um just had two other things your report notes um a consistent solar under performance uh to specifications i just didn't want to let that get through your report without giving you an opportunity to comment i believe the implication there was that every single renewable energy project that we have is not actually performing to its to its production specification can you comment on that please yes there were there's a specified capacity for each of those production each of those renewable out uh units that you have uh whether it's a solar farm or or whatever but you don't have any wind that i know of i know there's some being planned um and it it was just that every every every output i saw for every single month they never met their output that was the optimal output from the plexus model now whether or not that is because the solar panels are getting dirty or getting old or for whatever reason. But in the future, you either need to adjust for that or someone needs to explain why that is. I mean, you either need to adjust your output down for those units so that the model is correctly characterizing how they're actually performing 0:35:12 or you need to tell us why they're not performing as they should. So you're pointing out that this is a problem in the Plexus model at least where we're concerned today. It's just the dispatch is being made to be incorrect. Well this dispatch is incorrect but it's just consistently they're consistently underperforming and the problem is if you're since they're a purchase power contract it's really on incumbent on the person selling the energy to keep the the solar panels clean and operating as efficiently as possible. the problem is with solar as we all know they diminish about four to five percent or three to five percent every year in their output so we just have to understand that in the model if if you're going to tell me it's going to put out a maximum capacity of eight megawatts and it only puts out 6.5 every day then fine let me model it at 6.5 i'm uh i'm certain that mr laranger would like to be putting out as much as possible because he gets paid for production not absolutely specification we will send you his way when we have an opportunity to expand your scope financially and you can answer those questions for us last question i had was i just wanted to make clear your understanding is within your recommendation that this you have a stipulated rate agreement i i don't want to have to bring the wapa people on to say that they're good with 22.23 but your understanding is is their recommendation walks walks in line with yours with respect to the 22.23 retention of the current rate yes that is what their cover letter said they wanted to retain it yes sir commissioner hughes could i make one comment i i know you know this but for the other commissioners perhaps a benefit in that table one on page six scenario three is the liac charge if we if we went with the commission two and a half percent you and six percent so that's 0:37:26 the number that it would become not 22 cents just wanted to make sure everybody understood that understand that thank you uh commissioner williams is back i promised to come back to him and we can come back to any other commissioner that has further questions or comments having heard the discussion so far raymond uh i have no other comments i've wanted to make a motion any other any other comments from the commission yes i have a question from mr mark During his presentation, he indicated that during production, installation, and operation of these units, an inspection is required, 0:39:21 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 5 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session or should be done. Do we know if we're going to pay these inspections? We are not in a position to say this doctor have indicated that we have not had sight of the contract. The contract automate such provisions quite clearly on these inspection requirements. And there is a formal signed over. There is a close certificate that must be signed that basically states that is certified as certified having seen these machines perform. and there are a number of tests that are done fuel consumption heat rates there is a whole long list of things that must be ticked off i have actually refused to tick off on a close-off in um certificate i was instructed once by my board but look let us go ahead and we could we could redeem we need to get the plant online but it's a very strict protocol to close off the the installation before the machine is deemed fully commissioned so we don't know if these inspections were ever done by guapa or to what extent oh to what extent thank you gentlemen thank you for your report commissioner williams you have a motion yes um i move that um the commission accept the proposed rate um as proclared by our consultants i think it's 22.23 22.23 22.23 cents per kilowatt hour so moved second i think it's 22.22 isn't it i believe it's two three unless it's changed over over the last six years so um 0:40:02 we have a motion before the commission it's second let me just uh for the period of july 1 2026 to september 30 2026 thank you um any further discussion on the motion yes why can you clarify the rate so what is the existing rate is 22.2226 to carry it out to the full depth so technical amendment to correct for the record rate of 22.2226 commissioner williams we are inside the window the 30-day requirement window of filing so a waiver will be required also of the time requirement do you want to amend your your motion amendment to waive the public um the requirement for public notice so any further discussion on the motion we have a motion before the commission which is seconded to retain the existing 22.2223 rate which exists today for the period july 1st uh through the end of september of 2026 together with a waiver of the time filing requirement uh roll call please commissioner clement mcgrass yes commissioner laura nicholas yes commissioner raymond williams commissioner david hughes yes we have four votes engaged thank you commissioners thank you gentlemen for the the report i look forward to additional work the second item within this docket if i can get my agenda up here um deals with essentially a little bit of the deferred fuel account and i think it's useful to to do a little history check here going back to september of last year where the commission had ordered a lower rate the the utility petition for reconsideration it was denied and then challenged or at least threatened the challenge to to retain through the court process the rate that led to some discussion in executive session with director night about how to resolve that issue um whereby the commission made it clear we we would be happy to negotiate a um a certain amount of working capital to come out of the deferred fuel balance but we needed a process to do that and in that september meeting i i think i have this right and attorney sprain correct me if if you think i'm getting this wrong the commission and the utility 0:41:52 um the authority uh negotiated a stipulated settlement whereby the deferred fuel balance was agreed at that time to to be zero however with the provision um that we would at that point begin calculating any additional changes to the deferred fuel account coming forward from zero to the extent that they arrived in a deficit that any surplus however would be retained by the utility and not included in the june 30th 2026 liac which we have just adopted the practical effect of that is that if there were a surplus to occur between september 20 20 25 and june 30th that the utility would be allowed to retain that surplus without any reflection within a deferred fuel account if there were a deficit uh in that period calculated then that would become a new deferred fuel entry on july 1st 2026 and and the commission would then start a discussion about recovery of those amounts we don't have a calculation yet um or we have an ordered one uh for the period september through june 30th that's still a calculation we're going to have to do but that was the stipulated agreement with respect to deferred fuel if there was a surplus on july 1st the deferred fuel account was agreed to be zero and should be adjusted off the books of the authority if there was a a deficit then that deficit becomes the new deferred fuel count on july 1st and and the commission has agreed that we can take steps to allow that recovery so in that context because i know it was a little confusing because we didn't really document it all that well um in that context for our consultants do you guys have does that help i mean that that summary or is that different than what you understood it's generally consistent with what i what we understood as i as i recall they had a deferred fuel balance of 147 million or so under collected 0:44:42 as of the uh first of the second first of the third quarter 2025 so that'd be july 1st 2025 between july during the third and fourth quarter of 2025 and the first quarter of 2026 we think they over collected by the tune of around 15 million maybe a little bit more that those dollars we don't know what happened in the second quarter of 2026 they haven't filed anything but that those dollars should have been applied to the under collection and as of july 1st assuming they still have uh some over collection they would keep that over collection if they had under collection it would it would simply be an under collection but as of july 1st this year that deferred fuel balance would be written to zero and started again a new that that was my understanding reading the order yeah that's not correct though well director and i'll come back to you and we'll get your thoughts on this in a minute but the path for the commission is going to be that we need to calculate the 0:46:55 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 6 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session september to june 30th aggregate amount um of the utilities accounting we need to agree on that number and and then an accounting adjustment of some sort will need to take place on the books and be ordered by the commission to take place on the books of the utility um director knight would you like to give us your understanding of the the stipulated agreement yeah i think real simple we um we agreed that we would collect we We would continue collecting under the current rates for FY 2026. We would start a new accounting, which we have done, that started on July 1st of 2025. And we would keep a new accounting of the over-under recovery on fuel, which we have been doing. We have two quarters of information. we're about to submit the third quarter on the consultant is right um i think we have accounting up until december and i think we're about to submit the january march period um at the uh on july 1st the new accounting would uh take over we would erase any further claims to anything left left on 147 million balance that existed as of july 1st of last year and we would move forward with the new deferred fuel balance as tracked since july 1st of last year can you translate that into an example for us because that sounds an awful lot like you're going to attempt to retain some of the the 140 that was on the books back last july again um being clear we have agreed in that stipulated agreement that on july 1st in the next uh few weeks anything that's unrecovered for 947 million balance we will unfortunately forego that amount however we insisted in that agreement that we started a new accounting last july 1st and that that accounting would become the accounting of record as of july 1st while we while we will no longer make claims on the 147 we are keeping a meticulous account of the third field that began on july 1st and that is the amounts that we hope to recover um or if we have over recovered that would be the over recovery on record so we're not trying to keep anything um beyond july 1st whatever is unrecovered in that original balance we throws it at that point in time and whatever is unrecovered at that point in time um we will forfeit uh as part of the agreement to settle this matter just so that we can get a clean accounting with a new a consultant new numbers and we could stop squabbling over the old accounting on the old deferred fuel balance i think we're saying the same thing but for your benefit i want to make it clear that the psc's position is that if you over recover in this calculation of fiscal 26 which would be july of 25 through june 30th 2026 correct if if you were to over recover it's our position you will keep those funds there will not be an over recovery on the books that you need to return to rate payers all right and that that's that's acceptable to us okay thank you i think unless there are everybody kind of understand where 0:49:34 we're going with this uh because okay i think that probably satisfies the liac recovery item in our agenda today unless mr chairman um there's just two um two points i want to interject as i was listening to the conversation um i do feel it's important for the public record well probably three points i think i could also just commissioner over asses um concerns um but the generators that we got from whatsoever are in fact dual fuel in the sense that they can run solely on on um diesel operation in diesel mode, and they can run in LPG mode. We have used them to quite efficient success in a diesel-only mode. We also have used them sporadically in LPG-only mode. 0:51:30 We know there's a technical nuance where there is a pilot light that is a diesel-provided pilot light so it's we do have even when in lpg mode there is a small residual about five percent um residual of fuel that that is diesel that is used to to keep the pilot light lit but um they consume primarily lpg when in lpg mode and they consume exclusively diesel when in diesel i just want to make sure that's clear for the for the public i think that might have gotten a little muddled um when we're looking at i mean i do have to to continue to digest the consultant's report i just want to make sure that it was mentioned vi electron and we would take a look at the i have christian luringer involved in the in the conversation on on the solar farm output remember we also have two older much older solar farms um totaling about nine megawatts that are managed by bmr and so um i just want to throw that in there vi electron is not the only solar farms that we purchase power from and so i just want to make sure that the commissioner and the general public is aware that there is another solar provider um and if there is degradation and efficiency um you probably will be seeing it on those older solar farms um that were first installed quite frankly back in like somewhere around 2015 they really um they have some years on them now um and then finally yes um inspections on the new generation were done as they were supposed to be done um you know certainly when we get a chance to sit with the consultants we can walk them through um inspections commissioning and everything that was done prior to acceptance of the whatsoever generating units and i'm sure that that examination will bear out that we followed um what mr mark understands to be the process of on on commissioning new generation into our power plants and so we we have no concerns there and certainly we can make the contract available for mr wright and mr brockman's examination any other comments you'd like to make director um 0:52:25 appreciate you joining us today no at this time uh nothing further i think that concludes uh this item on our agenda which is the matters that deal with energy matters thank you wapa and thank you to our consultants for the reports and the good questions and the good discussions we've got some clarity on how we're moving forward the next item on the agenda is item well i guess it would be item four now st john franchise ferry boat matters docket 691 dealing with the hearing examiner's final report the staff's response to that the the uh st john ferry franchise's response and some discussion um if 0:54:28 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 7 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session we're ready to move on to that i'd like to just check the room and see if uh hearing examiner john hope is in the room and attorney hodge at a minimum uh representing the ferry boat companies yes good morning everyone uh good morning commissioner hughes i am on the line. Good. Ernie Hodge, you with us? Yes. Good morning. I'm President St. Thomas. Okay. I'm going to make a couple comments about how we're going to move forward with this today. We've got a lot of information that is in front of the commission at the moment. We've received the final report from hearing examiner John Hope. We've taken no action on it. It is simply a recommendation to the commission. It's not an order in any sense. It's not binding on the commission and the commission has several several things within that report that it needs to consider as matters of policy before we can conclude a a rate a rate process um in response to that report attorney uh turn yes attorney hodge has has offered us um a a lengthy uh response objecting to aspects of the report um that that that report from her was received yesterday which is not timely um there is no one in the room that has had a reasonable opportunity to digest that much less make a response so we are today not going to be discussing in any manner uh in any way the objections the letter of objections from um from attorney hodge we we are going to take that up in a structured process where mr john hope and staff have an opportunity general counsel have an opportunity to address her objections in writing and the commission will take up those written reports in in our next meeting um i would just like to to uh counsel both mr john hope and attorney hodge that there will be no discussion brooked of any of the objections um today we're here to discuss some very specific aspects of the final report which is uh at this point not approved not adopted but but beg some questions of the commission and i think we can have a really useful conversation today about those aspects and conclude some other policy matters anybody that wants to talk about the objections or for that matter take up a conversation of personal matters regarding billing issues or anything else you'll be removed from the meeting and have no further opportunity to speak so um mr john hope i'd like to start with you you've you've issued a report i'd like you to to restrict your comments here the process to which you received this very important number which is the revenue requirement and and you can define what the revenue requirement represents and in as simple matter as possible for the public and the commission and i'd like to you to speak specifically about in your process what were the data inputs where did they come from how how severely were they tested and and essentially how did you arrive at the revenue requirement the revenue required to run this business at a profitable level to the ferry franchises please go ahead okay um good morning once again um so i started the inputs for the rate base and this is the amount of uh fare that we are going to collect um from the uh from the from the passengers from the public this is separate than the subsidies um what i did was i took the current expenses um made some reasonable um adjustments to them since we're uncoupling the downtown run um and settled on the rate base um like as as i said we uh the inputs came from the ferry companies themselves um that is the best way to go about it and kind of minimize any um you know any discussion moving forward on where the numbers came from but i also in in addition to building it from the top down i also built it from the bottom up i looked at the projections that the ferry companies uh put together um in their reports and their submittals and i also built the rate base from the bottom up so just just to just to kind of back check um and make sure that we're all on the same page define rate base for us please the rate base is the allowed recovery uh for the therapy companies so it's the the amount of money um collectively that the ferry companies are able to recover Does it represent a calculation or accounting of what types of costs that they're recovering and at what profit margins? 0:58:35 It is at a profit margin of 8% to 10%. I think that's what the statute allows. It can be as low as 8% or as high as 10%. Historically, it's been assessed at 8% to 10% of the applied assets. right but the math fundamentally changed at some point because the government started um buying all the boats so you know once i took a look at the data um and the submissions we realized that the entire operational fleet has been provided by the government um and that fundamentally changes the way that i i recommend that the psc take a look at compensating the ferry companies the rate base is the same it's just a little bit different on how you get to that number that they need to operate the business so to be fair the commission of course asked for your recommendation but we passed an order last month which set the uh the permissible fleet structure that was not that wasn't something you basically determined on your own we you're responding to an order of the commission correct correct i was ordered to provide a rate structure that decoupled the routes i think i would be remiss in my duty um to you know point out that well their entire fleet is uh comprised of their entire operational fleet is comprised of government-owned assets um and the old formula allows them to be compensated or appears to allow them to be compensated on those government assets once you take the government-owned assets out of the equation how can the ferry companies make the money that they need to make to operate their business so that's the that's the question that i tried to answer in the final report what are the other elements of cost so there's there's obviously a capital you've been talking about the capital cost of the applied assets where the the ferry boat companies would or would not recover an amortization of their their applied assets their capital investment what are the other elements 1:00:08 that go into costs that need to be recovered in the rate base trying to think off the top of my head other elements that need to recover expenses whatever expenses they um they they outlay for example operations and maintenance things like that 1:02:07 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 8 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session they're allowed to recover as well fuel labor exactly yes o and m correct and any anything they spend on a on an expense basis not a capital basis you you take that number you aggregate it and essentially come up with a business model and in this case you margined it by what percentage of profit eight percent your your your rate base is an eight percent mine understood it was a 10. no eight percent okay well the commissioner should take that into consideration because we have some latitude in that area we're we're stipulated by the statutory authority to provide a return to the fairboat companies between eight and ten percent so there is that's a policy question for us we appreciate your recommendation um on just this this item of inputs and revenue requirement and rate based are there questions from the commission about how that was arrived at um commissioner mcgross i have no questions at this point commissioner nickels sams yes um mr uh jed john hope did you say that um fuel repair and maintenance or is it just fuel um it's it's it's all it's all it's all it's all encompassing so fuel repairs maintenance whatever they outlaid they are they are do a return on that you know and this is uh you know we we can we can argue a little bit about what it costs to run the business but i think it's only fair that whatever capital constitutes a qualified expense they are compensated on that for putting that money at risk okay i have a question so this d is dp i know that um the variable companies are responsible for fuel but is dpnr responsible for repair and maintenance for maintaining those it would be it would be public not dpnr but but go ahead wait go ahead it would be public works yeah i know i have public works i'm sorry you can go ahead and answer please yeah no dpw it's public works but i'm not the ferry companies are responsible for the routine o m of the of the vessels okay thank you is that cost transferable or no transferable to dpw i'm sure i'm sure it could be um but as as it is right now it's something that the ferry companies take care of raymond we attempt we've got a number of years of history now on these boats so we attempt to project what that number might be and we put that in rates for recovery from the ratepayers yes thank you thank you um i don't have any questions on the revenue requirement um i understand how it's it's made um a recommendation of your report talked about um did you we still have another question oh i'm sorry and i'm sorry i passed on the senator um senator do you have comments or questions i do i wanted to know if uh one of the factors are is any type of insurance risk um taken out by the ferry company uh is that included yes that that that is included that is a line item in their in their uh p l um so they do recover uh they do recover the salaries for the 1:04:01 employees that is included as well okay just wanted to clarify um and that includes if i may that would include all of the fringe benefits etc for the employees as well correct and any any training for employees is those that are so included i just wanted to correct those are those will be qualified expenses okay i would i would thank you thank you for the comment i would just like to clarify that that in effect the revenue requirement is is a number which includes every single dollar that the ferry boat companies spend to provide this service plus an amortization of capital invested if they have to buy big ticket items in this case i'm sure there is a capital account it's it can't be very substantial because it doesn't include the boats um in your report we talked about the you made a recommendation about the third party ticketing function um can you talk to to us a little bit about what the current problem is and and what you what you uh have recommended as a solution yeah so that was um that was something that was very uh kind of readily evident uh as far from a data integrity and verification perspective the two fairy companies at some point were ordered to um to create to um the psc ordered a third-party ticket solution but the fairy companies basically started a company um 50 owned by each um to handle the ticketing function so in my opinion 1:05:57 um that is not a third party ticket in operation that is more division of the current franchise ferry operations so there is no way to truly independently verify how much revenue is being brought in and i recommend that the um that the psc um create a truly independent ticketing organization because that would solve a lot of the issues around data data sufficiency um and what what revenue is actually brought in how would we do that um just put it out to bid and put out an rfp i mean i'm sure there are a lot of companies that can handle a ticketing organization um you probably have to compensate them similarly you know 10 of of whatever their expenses are or whatever whatever whatever um whatever the rate base is um i think that's the best way to go about it is put out an rfp for a truly independent organization to run the ticketing operations for the ferry system mr mr john hope pointed out earlier that there's been some investment made of course by the ferry boat companies in the current system which may be uh they may need to be uh compensated for um to the extent that a third party takes over the existing system um so that's um this is he's made a recommendation to us as commissioners to go through a process of of bidding out a separate ticketing function this is really one or two people that sit there all day and with a computer and take and print tickets and and provide the psc with separate recording for revenue which uh we've never had so um how would you test we're about to to create a rate at some point here or a collection of rates um what is your recommendation you know it's it's an estimate and we'd like to think we get it right but um i think you've noted that we have some data integrity issues that probably require some additional testing what is your recommendation 1:07:49 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 9 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session in the report for the uh for the commission to run kind of a an audit process or a periodic review of the rate structure so that we know that we've gotten it right and the ferry boat companies are profiting but not overly profiting yeah well i think that's important given that we are kind of fundamentally talking about changing the way they do business and you want to make sure that it's fair for the for the public as well as for the ferry companies so i would recommend quarterly reporting uh upping the report in frequency and kind of creating a kind of a standard um you know route by route analysis of what it costs to operate the routes and look at the major level levers right payroll fuel things like that um and then balance that with the uh with the revenue brought in and i think that if you have a truly independent third-party ticketing organization um you can you can look at you know how many rides are being sold what money is being brought in and then on the other side take a look at the expenses generated by the ferry companies um and say hey is this enough is this profitable you know is is is this are we balancing the books i'll open this up now to questions uh on those last two topics by the commissioners talking about the third party ticketing function and talking about the uh the basically the the basic testing function any questions from any commissioners okay the entity that is currently uh the entity that is currently collecting the revenues you said a 50-50 partnership is this a separate company yes yes it is but it's it's it's technically a separate company but it's not because it's owned by the ferry companies themselves when i say a separate company i mean do they have a business license as a separate company um yeah i'm sure 1:09:52 they do yes i would i would assume so and there's no way of auditing that entity to find out the revenues that they've been collecting i would say that i my rec i stand by my recommendation it's better if you have a third a truly third party run that function i mean that is your cash register um so you don't want the person that's in charge of expenses to also be in charge of verifying you know the money being brought in it's just a check and balance to make sure um that um you know that that that everything is on the up and up and you can trust the data and you know that was ordered by the psc when you know the third party solution was uh was put into place how would you probably repaid each company depending on who's carrying them all passengers i mean that's that's that's not hard i mean you'd figure out you know who actually you know fulfill you know this ride or the next um and create a system where you know they're i don't know they're paid you know x dollars per per ride um in an aggregate you're gonna see one company make more than the other if they in in in reality delivered more rights i'm not sure i'm i'm inclined to go that way because um we are in we're refusing that we're putting the psc in the middle of a company's operations and i don't know if that's the way i want it but i'll defer to my fellow commissioners i think we are by definition in the middle of 1:11:56 every utilities operation that's that's our role i i don't i don't want to operate that company as a commission but i i don't have any problem at all like having it causing it to be created as we did years ago the problem is is what was created was not what we ordered what we have is an affiliate under common ownership that's not the same thing as an independent third party and and the objectivity of that affiliate under common ownership is is really not sufficient for what our original order intended to do which is to give us a an auditable revenue point which we still don't have other questions for mr john hope i'm going to turn the conversation now to the commissioners to talk about a situation we created when we decoupled the downtown route we still have to conclude our thoughts on regulation of the downtown route it's part of the ferry boat franchise and i want to talk a little bit about what the options might be to get into that it doesn't really wasn't part of mr john hope's isn't part of mr john hope's continuing function although he could be further engaged um we decoupled this for for good reasons it was obscuring the costs of the downtown red are disproportionately unprofitable because of the low ridership and the high costs of providing the service um we decoupled it so that we could get a clean look at what it took to run the red hook uh the red hook cruise bay route which i think has been a success um now now we don't have to worry about you know additional boat costs and additional fuel and being commingled into this this calculation it provides for a very simple and clean calculation by mr john hope of just the the red hook cruise bay route but we still have to deal with the downtown route um our choices are we we can choose to um to not regulate the route we're we're not obligated to provide rate regulation for it. So we can let it float. We can run a separate process and run all these costs back and try and get a sense of what it actually costs to run and set the rate based on that amount. My own personal thought on this is that we should turn this question back to the ferry boat companies and ask them what they think the rate and the schedule should be to run that route as efficiently and profitably as possible that would be attractive to them as the franchisees and have them come back to us with a recommendation for the rate for that route which we could then consider in order that would be how i would conclude this conversation i just there are market forces over there that competition that doesn't exist in the red cruise bay route so i'd really like to hear from miss varlock as to what she thinks the route should charge and perhaps we'll just order that i think that the commission should continue in its regulatory role as for customer service issues for the downtown route and have some voice in the schedule although our voice has been frequently ignored by the ferryboat franchises which is is to say that this route hasn't really been regulated um so i'd like other thoughts from you guys do you 1:13:45 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 10 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session want to regulate this route do you want to go through another rate process do you want to have the ferry boat companies provide a recommendation for for rates and and levels of service and allow them to free float a little bit against the competition i'm going to open that up for commissioner's uh comment senator joseph you got uh you got thoughts on this yeah okay commissioner yes do we know whether the general operation is still subsidizing the downtown one operation absolutely yeah it is yes yes it's hard to say we don't have any accounting for the downtown route so probably not it's not what they're charging i think it's 12 or 13 bucks uh competition's charging 20 20 plus at this point but they're making a business of it so um yeah that's i want this to be a profitable route but i really don't want to be involved in setting the rate for it okay i have um some questions from miss varlac excuse me commissioner i don't think that miss varlac should be questioned in this hearing in which the chairman has ordered us not to speak i have an order i'm the attorney i'm the attorney for the variable companies we appeared in response to your agenda as published the chairman told us to be quiet or we'd be removed from the room but i don't want my client questioned by the commissioners in the midst of this one-sided presentation i hope you'll understand yes uh attorney argument she can speak or not talking about commissioner sam let me address that real quickly she can speak or not that's always her priority we'd love to hear from her your instruction this morning attorney hodge was that you will not address your letter for objections of objections we're not dealing with objections to the rate case right now we're dealing with the actual recommendations in front of the commission in a very very limited sense we're not making determinations we're taking up that 1:17:20 conversation of your objections since they were not received timely in a manner that allows us to do so in a formal moment i would ask mr chairman uh attorney hodge do not interrupt me okay she may speak she may not speak to the objections if she has information and response to questions from the commissioners welcome to offer those or not she will not speak to the objections to the hearing examiner's report bar lack i recommend you not speak until we're permitted to address the matters on this item on the docket commissioner sam if you'd like to address miss barlock and she can make her response or non-response on the record thank you commissioner laura nichols stands i did have some questions concerning the downtown route because that's what we were discussing i was wondering who presently which one of the companies is presently running the downtown route um not a question say that again can you repeat that please yeah good afternoon or good morning i would read the advisement of my legal counsel at this time thank you yeah i have no questions if i'm not going to get a response to any of my questions thank you so other comments and questions from the commissioners regarding how we're to deal with move forward on the downtown route um chairman hugh since uh we we're gonna operate this way i think we should we run back to these were initial top doors on top 1:19:32 we are trying to give the variable companies the opportunity to set their own rate and rate of returns and stuff like that but this is how the cooperation is going to be i think we should go back and regulate it well it isn't to say that we're not regulating it if we don't come up with the initial bid if you will i'm not saying we're not going to regulate the rate i'm just saying we allow the ferry boat companies to not just offer us their expenses that they essentially offer us the rate at which they'd like to operate the route and see if we could reach agreement on that number well if they're not going to respond then what information do we have to go with i don't know i don't know that ms farlock is not going to respond i think she's not going to respond today and that's okay we we didn't we didn't intend to decide this matter today i just wanted to get it on the table i'm sure given the opportunity to set her own rate miss farlock might have something to say but that i'm going to honor her her desire to not speak today and she can consider she can consider this in the same manner we're considering this how to get to a resolution of of the downtown route I don't I don't think that commissioners use is not allowing you guys to speak we just received the document we have I think for myself I have not had a chance to review it and I don't like to make any comments or anything about a document haven't reviewed so for me you know with your response i haven't had a chance to review it we just got it we need to get stuff in a timely manner so that we're prepared as well 1:21:24 if you were not going to take up the matter today to give you time to review our written objections i would fully understand that but to take the report from the hearing examiner in light of the objections we've raised and essentially order us to be silent as that's done is it's really shocking to me i'm just speechless here commissioner i don't know what to say about that okay one take it thank you any other comments or questions from the commissioners regarding how to resolve or how to move forward on the downtown route question i've put my thing out there do you guys have any other ideas what do you want to do i do have some ideas did you want i guess for me i i feel like that route should be run seasonally um just because i don't think they have enough ridership for it to run full time throughout the year and it would be running at a loss probably so that's my first my observation um the second thing i would like to hear from the companies or whoever's running the downtown route to find out would it be beneficial for them to you know have us establish rates and work that way or would it be more beneficial for them to run it privately like a lot of the other companies that are making the downtown run to red hook or to wherever they're going you know like i think we have the the west and they have their own private company i think they run from crown bay all the way to their resort and then 1:23:17 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 11 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session there's a couple no no i think they pick up at red hoof and um i think there's another one that leaves from the national park doc um in st thomas and you just mentioned too uh commissioner hughes that their rates are like 20 20 whereas the varlac or um transportation service whatever's running that um that they're only at 12 so i think it might be more beneficial but that's to i would like for that to be their decision to make i had another one but i can't remember commissioner williams um i think this we're trying to do the conversation i should just be table i i agree um John Hopes, having not really allowed any other response Mr john hopes or PSC staff to respond necessarily to the report, I think we'll we'll conclude our our I guess our information session on the report, having taken no action, and I actually let me stop is there anyone in the room that has registered for public comment on the report, the report was filed The public had some opportunity to take a look at it. Do we have any public comment in either St. Croix or St. Thomas with respect to the conclusions of the record? Hearing none, we'll move on. 1:25:36 We had asked and ordered last session that staff prepare for commissioner's review an audit design to, which was designed to audit the ferry boat data inputs on labor and fuel consumption, not fuel pricing, just basic consumption, because those are two of the larger cost inputs to this whole rate question. Staff move forward. I'd like to give them an opportunity to come before the commission and present briefly the results with respect to the report that they shared with the commission on this audit process. Who's speaking for the commission? 1:26:33 Good morning, Jamil Springer, PSC Industrial Engineer. And instead of time, I'm just going to give a brief summary of the report. PSC staff were directed to design and potentially conduct an audit of the ferry boat company's fuel and labor costs. On May 20, 20, 2026, staff monitored the Red Hook and cruise bay route. The objective was to gather and analyze data. 1:27:19 There were a total of 38 scheduled ferry service runs with a combined ridership of 3,338 passengers. Transportation Services completed 23 service runs, while Violac Ventures completed 15 service runs. Three vessels were used, two government-owned, Spirit of 1733, and Cruise Bay 1, and private-owned daily venture. A series of fuel invoices was submitted to the PSC for the months of March, April, and May. Three suppliers were used by the ferry companies, two from St. Thomas and one from St. John. At that time, during the months, St. Thomas diesel prices were in a range of $3.95 to $5.98. 1:27:52 And on St. John diesel prices were in a range of $5.76 to $7.68. transportation services submitted a total of 43 invoices at a total cost of 183 760.39 at 83 percent of that total cost was from St. John at Caneo Bay at a total of $153,033.23, while 16% of the cost came from St. Thomas at $30,727.16 for the March to April of 2026. 1:28:50 in the month of may 2026 violet ventures had a total number of 22 invoices at a cost of 72 thousand 825 dollars and 45 cents 92 92.6 percent of that cost came from saint thomas at a total cost of $67,423.90. 7.4% came from St. John at Canoe Bay at a total of $5,401.55. The audit confirmed that fuel costs represent a substantial operating expense for both franchise operators. The review of fuel invoices and refueling practices reveals significant price differences between suppliers located on St. Thomas and St. John, with fuel purchase on St. Thomas generally being less expensive. However, operational constraints, vessel scheduling requirements, service obligations, and vessel availability may require operators to purchase fuel at higher cost locations to maintain uninterrupted service these operational realities should be considered when evaluating fuel related cost recovery mechanisms including the emergency fuel surcharge petition while the audit systemally gathered expensive information regarding vessel operations and fuel expenditures the review was unable to fully evaluate evaluate labor costs due to the absence of detailed labor and personal expense data as labor costs represent a significant component of overall operating expenses additional information from the franchise operators will 1:29:51 be necessary to complete the commission's intended assessment of variable operational operating costs such information should include wages employee benefits payroll related expenses workforce composition training costs and other labor related expenditures that will conclude my report questions from the commission senator uh this is specific yeah specific to our audit activity well i don't have any questions at this time just came back in and stepped out for a moment Commissioner McGrath. No questions. Commissioner Sam. No, thank you. 1:31:42 Commissioner. Mr. So the the assignment here and what we were attempting to ascertain was not really expenditures of fuel. what what we're trying to determine is how much fuel is consumed um within the red hook cruise bay route um based on the boats that are being used so this was this had very little to do with fuel invoices um the process of auditing i i guess i'd ask you the question how do you how do you understand for instance the new boat how do you understand how much fuel is consumed during a day of 22 routes from the work that you did in the audit well it depends at that time when operations began how many fuel they have within the certain vessel they're using um between red hook and cruise bay it takes approximately 20 minutes um depending on which vessel they're using is the government owned a private polar private use for i guess barrel garlic ventures um speaking with the captain approximately it takes about 45 gallons 1:32:31 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 12 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session of fuel to do service between the red hook and cruisbury run for the day or you know every for every room so the the audit process is to verify his statement um what what is available to you what is what method would you use to validate because look the goal here at the end of the day is is we want to understand how much fuel is consumed in a year and or a month or a quarter so that we can use that to determine whether or not the fuel projection expense that is being offered to us in the reports by the ferry boat companies is accurate these are companies that that run these boats other places that run other boats we we don't really have a way of breaking out in an invoice we we need to audit by virtue of consumption and then we can apply pricing but the the task here was to figure out how much fuel it takes to get from let's say round trip or or each way but round trip would be better and then extrapolate the fact that we do know which is how many routes get run how many round trips get run in a in a week a year a month a quarter um i don't see that that our our exam here provided us with that information um it would be fuel gauges it would be a refueling and interval divided by the number of round trips i mean if you're doing this in your car and you drive to the airport from your house 20 times round trip you you start with a full tank and then you go to the gas station after 20th round trip and you fill up your tank and you now you know how much 20 round trips take to go to the airport and back we didn't do that here so we don't really know what the consumption of fuel is other than the statement given to us by the captain and that's not an audit that's that's just a report if i could elaborate sure when it comes to a vessel, it does not give as pertaining to numbers of how much fuel is in the vessel. For the Ola boats, they have a mechanism in which they use a fuel stick, and that method is very unprecise. They have their own methods, how they can judge how much fuel is in there. 1:35:07 the fuel sticks is just a a number of lines there's no numbers at all um for the newer boats it's just a percentage they do have a looking glass but the numbers vary from from top to bottom well how about this you get on the boat in the morning before they run it and you fill up your tank you you observe the fill up of the tank the tank is now full you stay with the boat all day long and you observe the number of trips that it makes and then you go back to the fuel dock and you refuel and you divide the number of gallons by the number of trips that you take and now you know approximately because weather conditions and and the like sees um wait time at the docks but then you know approximately how much fuel is consumed in each round trip and from that you can extrapolate honestly the annual consumption of fuel and apply pricing to that that was what i had hoped was going to come out of this audit process was you observing something that was verifiable because as you point out the gauges the gauging methods are not particularly reliable for this but we have not accomplished the goal of the audit which is to understand the consumption of the three boats the fuel consumption of the three boats you only have to really do two of them spirit of and and one of the other two boats because they're virtually identical um if if my mate um Mr. Chair that day Barlock Ventures did not refuel only one boat was refueled which was a spirit of 1733 which was that when you design the audit process next time you'll inform the ferry boat companies that they need to refuel in the morning and and and the last thing at night 1:36:34 that's that's going to be part of our process if you want to follow the process you don't you don't leave it up to the ferry boat companies when you're auditing them how you audit them you you simply tell them this is what we require is data and we'd like you to run this process so I would suggest that we're going to have to go back and look at this further it didn't have to be concluded today but to Mr. John Hope's comments we have data integrity issues and this is a big number that needs to be checked with respect to labor um i got the impression from the report that you have a high level of confidence in at least the head count necessary to run each boat is that is that a fair statement head count not wages not not expenses that's a fair statement um coast guard regulations at least four personnel on the boat okay so we we can understand how many people run with each of these boats and from that you can apply the wage structures and the burden rates and everything that the ferry boat companies will then tell you about the expense of each of those people and multiply that by the number of hours in their payroll and then you can check against their payroll to see if their labor costs extrapolated over time are are accurate to what they have projected because it's important that they be accurate to what's projected that's how we set rates we we have to understand that the major components of this rate are accurate not guess that not and they have to be verifiable so i i appreciate your comments about not having the knowledge uh or the information to extrapolate the total labor cost but what we were really after and i think you got it was understanding the and having the ferry boat companies agree that the headcount requirements to operate the boats are consistent over time and that this is how many hours they run each day and therefore we can extrapolate at least the total labor component in terms of hours and individuals from that you can extrapolate an awful lot of information that's applicable to rates and we probably could proceed now with the information you did gather and extrapolate that information further what happened to red hook one that day 1:38:22 Okay. We ran Lady Venture. What's going on with Red Hook 1? At that time, they was using Red Hook 1. Where? Red Hook 1, I believe, is assigned to Barlack Ventures. And on that day, they was using Lady Venture, which was fully fueled at that time. So we don't know why Red Hook 1 was unavailable? No. Okay. Do you know the boat capacities of 1:40:36 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 13 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session the small government boat and the new government boat? I believe, I don't have that information for me, but I think it's approximately, well, maybe like 200 passengers. For which? Because one of those boats is much bigger than the other. I would believe there's two smaller ones, I believe, for Red Hook and Cruise Bay 1. We're rid of 17, 33, my baby, just maybe 50 passengers more than that. So you think the smaller boats are, well, we don't have to guess, but you think that's up in the 200 range? Yes. Okay. So I did note that you gathered extensive information regarding the number of passengers. Did you count heads or did you just take the reports from the ferry boat companies? No, staff counted heads at each location. Okay. So that seemed to indicate to me that a boat that can carry 200 could have run any one of those routes that day. There wasn't anything above, I think, 150 that ran that day. I know it's an off day in June. but um i'm i'm what i'm getting at here is how you made the point that spirit of is it 1733 spirit 1733 is a more expensive boat to run because of its fuel capacity and maybe even its higher labor component and so ideally an efficient operation would not run that boat unless it was necessary at high peak times given that we've got other boats that we can run um i'm just curious how often 1733's gotta run um how often do we think that we're gonna have to bring them both that into service because otherwise we'd be full and leave people at the dock that would be a question that doesn't actually expect an answer um okay well those are um those are my questions um and and i appreciate your report and i'd like you to i'd like you you to consider that we didn't fully answer the questions of the commission that led to its order last month and we probably need to rethink an approach on how to get at fuel consumption that doesn't involve just taking a receipt from a dock in St. Thomas. The last item we have with respect to the ferry boat companies is to take up the conversation of the emergency fuel petition and And we deferred this from last month. It's still before us, and they are owed an answer. Attorney Sprain, would you mind summarizing where we are and what we've received and what our next step in action might be? 1:41:44 The report is the same as the judicial charge. I'm sorry? The report that I gave is the same. Yeah. so it's basically the same that's not a separate pse staff report it is the same report that you received from mr springer there's none of us we have a petition for an emergency fuel surcharge it involves an amount of money that we've been asked to authorize in addition to current rates we need to know how to think about that do you want to summarize the petition um i would actually invite attorney hodge to do that summary of her petition attorney hodge would you like to speak to this matter It's permitted to do some. 1:43:55 You're permitted to do some. Thank you. I understand that I'm addressing the fuel surcharge, emergency fuel surcharge petition. That's correct. and the companies have filed a written petition seeking an emergency fuel surcharge as a result of the interruption in the supply of diesel to all. Commissioner Muse, she has to be sworn in. I'm sorry. 1:44:52 Okay. I'm sorry. No, don't worry about me. she's an officer of the court i think she's fine the uh okay thank you the emergency petition was filed as a result of the effect on the cost of diesel fuel in uh in the operations of the two ferry boat companies obviously it's an effect on essentially everyone in the in the world but in particular uh transportation companies uh people in the virgin islands generally and the petition that we filed was accompanied by a calculation done by our expert mr avery williams who used to be your expert who did a calculation uh recognizing the increase in the cost of fuel with the companies um between the um the beginning month which i think was january and the month he did his calculation which was march which was almost three dollars a gallon difference in the cost of diesel for for the single month for barlac the class of diesel went from 385 a gallon to 610 a gallon and for transportation services from 576 to 760 a gallon those numbers have varied a little because the cost of diesel has fluctuated a little as we've all gathered reading the newspapers as the fate of the war has um has varied over the last few months, but the basic effect of the war in Iran and the effect of the closure of the Strait of Hormuz on the cost of diesel fuel to these two companies has been ongoing and obvious and unavoidable. And the request was to recapture this additional cost on a temporary emergency basis at an addition of 75 cents a ticket until the emergency abates or some period of time that you fix i think one of the commissioners maybe commissioner mcgrasso the meeting when this was first mentioned suggested putting a three-month period on the surcharge so that it would automatically come back to you for reconsideration 1:45:34 we don't really have an objection to an automatic review obviously this is an unpredictable situation the the one issue that came up after the petition was filed was the fact that transportation services have been paying something more for its diesel than bar lac that had to do with the fact that they had to fuel their vessels at a different location we filed responses about that with you so i hope that those answers are understood um the the staff's audit function which i gather was not directly tied to the fuel emergency petition nevertheless resulted in the opportunity for your own staff to observe the refueling and i submit to you that there's certainly no indication from that process that there is anything but an honest report to you of what's been going on with the cost of diesel fuel we got two separate letters from your staff thanking the companies for their amazing cooperation process you're aware i think that there was literally no warning of this they they were arriving to go on the first vessel i think like something like 5 30 in the morning and the letter saying they were 1:47:45 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 14 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session coming came at like seven and they were still welcomed with open arms and invited into every part of the vessels to observe the process and so on so there's just no reason at all to suggest or believe or suspect that there's anything but an honest report to you of an emergency that requires a surcharge um it is unrelated to the basic rate case because no matter what the rates underlying are the fuel emergency is real and it is in addition to their normal cost of operation um we submitted some documentation to you on why it was not really possible for transportation services to obtain the lower cost of fueling especially for 1733 has to do with the fact that because the limitations put on the use of that vessel by the federal government they can't um they can't use it for the downtown run so they can't uh coordinate refueling at a town location with with a run and and i think your staff has indicated in their report about their audit it it really wasn't cost effective to have them go downtown just to get fuel from the alternative supplier so it was presented to the commission as an emergency and it's still an emergency and we urge you to act today to approve this temporary surcharge whatever um delay there may be in the review of the rates as a whole i assume will be on your agenda for your next meeting to talk about other issues but this one i would ask you to act on today thank you attorney hodge i'm going to suggest that the issue here is not whether or not you're paying more for fuel because you almost you've not you're not almost you are absolutely paying a higher price for fuel we understand that i think the question that the commission has to consider is are you over recovering in your current rate base such that you should be able to absorb that that higher non-project non-projected cost um we've got a report in front of us not adopted but but a recommendation from our hearing examiner that your rate date is i want to say somewhere in the 5.1 million range necessary to operate the the ferries profitably in the current environment um he also is aware of the current rate base which i think is somewhere up in the seven million dollar range for me i'm wondering if you're collecting an extra two and a half million dollars above what we're looking at as a recommendation for uh for the new rate i'm wondering why you can't absorb that additional fuel cost in what you're currently over collecting according to the hearing examiner's calculations understanding we haven't adopted that recommendation yet so that would be my comment to my my fellow commissioners about how to think about this i think you're currently over collecting i think it's been demonstrated by the rate case and therefore the fuel should be absorbed within the over collection amount of two two million plus dollars but i do think we need to resolve this today and and i'll ask for a motion when i'd like to bring mr john hope on just to give us the numbers of the comparative rate basis. Just real quickly. So, Mr. Chairman, even now, am I not permitted to talk about the objections to Mr. John Hope's report? Because if you're going to incorporate his report as a reason for denying this emergency petition, and I am even so silenced in expressing the objections to the report, I'm pretty sure we're approaching the definition of a denial of due process. I have 1:49:42 stated that the report is not accepted, that it is a recommendation, but it is a data point, and it is a data point that i think the commission can easily consider with or without your objection um i'm not going to ask him to defend the number i'm just going to ask him to put the two numbers out there so that we can understand what what is in front of us right now with respect to difference in rate base mr john hope yeah um as as you uh correctly stated the current rate base is around seven million dollars a year and i recommended uh moving it down closer to five um but i think it's you know on on top of the over recovery that you uh that you mentioned i'm gonna stop you there i just wanted the numbers all right that's fine i don't need i don't need to you to support them or make a case for them we we're not we're not accepting them but they're a data point for me and they might be useful to the other commissioners i'm going to open this up for questions from the other commissioners and and then ask for motions with respect to this because i think it's something we need a fisher cut date on um not fair to just keep waiting and hoping something changes um commissioner mcgross um question how did you arrive at 75 so george so there's a detailed um calculation attached to the report commissioner mcgross that was prepared by avery williams he took the total increase in cost of diesel he divided it by the different categories of customers and came up with the calculation that 75 cents a ticket would be the amount needed to recover this additional um cost of diesel the additional cost of diesel i think was coming to eighty thousand six hundred and seventy eight dollars a month so that was it this this is way past my map capacity but his calculation was that 1:52:46 75 cents a ticket was what was needed to recoup that increase in cost was that 80 000 divided by number of passengers that travel in that time so his yeah his charts shows the 80 000 it shows a ridership of 122 784 and it results in a calculation of a recommended surcharge of 75 says technically speaking it's a few pennies off but that was his recommended um average would you have any objections considering would you have any objections to considering outdoor compensation well this is now being requested but at this point given the emergency i think the companies would probably appreciate you know any help they're they're in a desperate situation thank you commissioner i'm good wait you were getting ready to say something boy i actually was looking at uh excuse me the boyd sprain uh general counsel this is not a legal response but i was looking at the spreadsheet actually the calculations of uh mr williams on the tickets and i can offer a couple of observations the calculation for the increase in fuel price actually comes out to 66 cents a ticket the extra part also includes a seven cent allowance for an increase in docking fees because the port authority has increased 1:54:44 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 15 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session docking fees in the current year um and it still would be a couple pennies rounded up but that's that's a ballpark uh i also just did a quick bit of math and said as it's been noted transportation services is paying substantially more where it's fuel than varlac is because they don't go to the lower priced facility there's a cost of doing that i i can't speak to whether or not it's cost effective to go pick up the fuel at a lower price when you're buying a thousand gallons at a time but um if you just gave them the lower cost that varlac incurs which is thirty three thousand dollars in change per month if you double that to 66 000 and then divide it amongst 122 000 that works out to about 54 cents a ticket so those are just some of the numbers that you can fight i'm sorry i think we we need to uh grant um the emergency surcharge but a departure down from the 75 to um to the 66 cents that's my recommendation are you uh are you prepared or are we ready to to invite motions okay commissioner williams I move that the PSC grant the variable company's emergency surcharge of $0.66 per gallon for for a period of 90 days second um oh wait there's language in there that happened in 90 days this increase shall sunset unless it is i think that i think that's um that's a given because 90 days of the 90 day window they need to come back i think it's likely we'll set new rates by then and it'll be a moot point so um okay so uh any any discussion any further discussion on the motion right away okay yeah second emotion but okay i have emotions um i just have a point of discussion 1:56:59 for commissioner williams just before you discuss use um we need to also include the waiver of a 30-day notice public service true true um thank you the um i like round numbers i just i do um and i think putting a 66 cent charge on a bill almost begs me questions and it answers can we can we go to 60 uh 65 i mean something that's just a little more friendly by the way is this for every rider because we have a number of classes of heavily subsidized riders for which this will actually be a substantial uptick is this all rate classes the proposal was already classes mr chairman okay so and and i'm sure your math was derived from the idea that there are x number of riders divided by the recovery amount so that that makes sense um those are my only comments i don't know chairman williams if you want to consider a different number but i if you want 66 we have a a motion which is seconded before the commission and i'm prepared to call for the vote yes have you restate the motion the motion is to grant deferral companies a an emergency rate decrease for 66 cents per ticket for a period of 90 days and to also waive the public notice requirement 30 day night 30 day public notice requirement trouble roll call commissioner clement mcgrass yes commissioner laura nicholson yes commissioner raymond williams commissioner david hughes no 1:58:48 we have three votes in here one vote in me the motion passes um last item on the ferry boat companies is a policy discussion amongst the commissioners uh mr john hope is still with us to assist us in a couple calculations but we have this theoretical rate amount that we have to achieve as a total revenue point each year in order to make sure the fairies operate profitably raymond are you leaving because this is a 10 minutes would be great. I'm already overextended. All right. So the opportunity here is that Mr. John Hope has taken his proposed reduction and he split it equally, for simplicity, I think, equally across all rate classes. And I think it was a 21% total decrease in the rate base and therefore a 21% total rate decrease across all rate classes so the policy discussion is it's up to the commissioners to determine who pays for the total rate base and we have the opportunity to spread the burden differently particularly given that a reduction has been proposed or at least a change has been proposed i've asked mr john hope to provide a little bit of a sensitivity spreadsheet so that we can throw numbers at him about how to burden the different rate classes and and i'll start the the rate classes that are currently in the rates are children seniors students bulk ticketing people that buy like a ticket book um bulk transit of goods and luggage and non-residents and adults so we got all these rate classes hanging out there a number of them have very little contribution at all to total revenue so there's an opportunity here to simplify some things um and i'm going to suggest uh with mr john hope here to back up the numbers to give us an idea of what the rate the rate base looks like if we want certain people to pay certain rates and i'm going to suggest that for the benefit of the virgin islanders residents of the virgin islands we should make all students all children and all seniors ride these boats for free they they make no measurable no no particularly uh great contribution to total revenue it's very easy just to put them on the boats without a contribution to revenue i would like to hold the line on the four dollar baggage charge and i would like to hold the line on the non-residential eight dollar rate um and and the question then becomes the commuter book only remaining classes at that point the commuter book and the adult resident have to be a certain number so that the total revenue is of 5.x million dollars which is hypothetical is achieved and and i would suggest that i would like a rate decrease for the current adult population from six dollars down to 450 and that the commuter book people have a an effective per trip i think they buy them in books of 10 the effective per trip cost of down to 250 i don't know what they're at today and and i asked mr john hope to run that number and see if that pays the bills for the ferry boat companies um i would like each commissioner to to throw out their thoughts and and it can run the gamut of what he's proposed which is just a across the board rate decrease for everybody my permutation which is free for a lot of people and a reduction for all virgin islands residents and holding the line for non-residents and honestly there's a permutation here that says we charge the non-residents the entire 5.1 million and the question would be well what would that rate look like if all virgin 2:00:46 Machine transcript · UNVERIFIED. 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VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 16 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session islanders got to ride these boats for free i'm going to open it up now to to commissioner mcgross and commissioner Nichols-Sams for any permutation they want to run with Mr. John Hope and his calculator and just to to get a sense of this is a policy decision it doesn't involve the ferry boats they have no policy role they they have no role whatsoever in setting individual rate classes this is a right reserved to the commission and therefore it's a it's a discussion amongst us I'm just trying to open it today not resolve it so um commissioner mcgross uh senator senator joseph if you're still with us i'm very interested in her thoughts on this it's an opportunity to do something special for the virgin islands residents who's um who's still in the room okay sorry senator joseph is responding okay uh at this time i don't have any major comments i do want to see how it looks because we do want the ferry companies to be able to operate and pay its bills um and i do like that the thought and the idea of granting gratis to the senior population as well as the students um i do like that i would have to see and also that we stay consistent uh with the residence charges uh for the ferry boat transportation but i will have to see some uh data on how that is done and i know the commission is typically you are driven by data in your policy making decisions so i would look forward to seeing how that is done um from the numbers again what you're proposing 2:05:04 for the commuter and why we why are we only charging four dollars for i'm and not say a good like six dollars for the luggage um i think six what is what is the current rate for the luggage uh currently four dollars yeah i would i would definitely increase it to maybe six dollars even a nice 10 to look at that because the people pay about 35 dollars right now for luggage and in some instances it's waived so i would definitely would want to see uh some type of data and analysis done um with these numbers to see if the fairy company would be able to uh still make a profit pays bills they have a lot of bills to pay um because they're taking on this service uh for the government of the virgin islands and uh also to see you know how that would look and just keep in mind our competitors from the bvi they normally charge a do too uh when you are actually leaving and entering into the bbi so uh maybe we may want to look at it on that app and it's 20 each way even without and you paid i don't really i don't know if you paid for your luggage i think there's a cost for your luggage too um but that's something we need to contemplate them with that and then that was kind of like so so there is some number and we're not in agreement on it obviously um to be fair to attorney hodge and the ferry boat companies there is some number of revenue per year that has to be generated in order to create what we call the rate base and that is the fair profit return on all expenses of the ferry boats we're not in agreement on that number but we have what's been put forth by mr john hope so it gives us something to at least play with in terms of a a rate uh prejudicial rate structure if you will um we have to assume that whatever number we come to is is a correct number so we're going to work with a number and mr john hope the the calculation here is if you spit out the amount you want to charge for luggage and the amount you want to charge for non-residents and the amount that you want to charge for adults mr john hope's on the line right now and he can tell you whether or not you meet or exceed or don't meet the the currently proposed 5.1 million dollar number of revenue necessary to run the route i'll i'll ask just as a as an example mr john hope i want an eight dollar current hold the line for non-residents i know that the non-residents are also paying most of the luggage charges because people are carrying luggage when they visit so i'd like to hold the line on four dollars as well i would like a reduction for the adults to 450 i'd like a reduction for the commuter books to 250 i'd like everyone else to be free mr john hope 2:06:53 would that meet the revenue rate the rate based requirement yes yes it would you would over recover by about 250 000 per year okay so the ferry boat companies would make an additional 250 000 with our knowledge if that was the rate structure against the current proposed rate base mr john hope how much would a non-resident have to pay for every virgin islands resident that gets on a boat to be free not changing any of the luggage stuff one second it would be about 11 bucks okay so i mean that's that's an option we uh we already support these ferries with federal subsidies and island subsidies um you know it's a reasonable position to take that the non-residents support it with nothing other than paying their fare so that's an option before the it's a policy option before the commission um anybody else want to throw some numbers out for mr john hope he's got a spreadsheet it takes about 20 seconds in iteration just to see if that meets the need the current projected need for the ferry boat company's revenue i would just like to say that i support the consumer aspect of reducing the rates however it's also the responsibility of the psc commission and make sure that the ferry companies are making a profit, a reasonable profit. 2:10:03 And- You understand that's a- So, you know, I'm willing to look at some permutations of juggling the rates a little bit to ensure that they make a reasonable profit, but also to ensure that the residents of the Virgin Islands get, you know, fair, a good fair rate and a reduced rate if possible. Okay. So that's a discussion that we need to complete about what the rate base is. It doesn't have really much to do with how we cut it up into pieces. So we have a rate-based projection by Mr. John Hope. It might be what we agree to, it might not. But that answers your concern, Commissioner McGrath, that the ferry boat companies are making the profit that we've been told they need to make by the legislature. I'm not saying- I'd also want to hear from the ferry board companies what as to what their rate base number is well they came up with the resultant that was part of the hearing examiner process um they offered the data and they made a they made a proposal as 2:11:44 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 17 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session to how much they think their rate base is um and that's the process we're going through right now so um anyway i just that's that's the exercise here and it's a it's a theoretical exercise today but i wanted to make sure the commission understands that this is the role of the commission to to decide who pays that aggregate big number who pays what piece of it and and it's an opportunity for us to do something differently than we're currently doing commissioner sam do you have any permutations you want to run No, I don't have any commentations I want to run. I understand everything that's been said. I just want to have the opportunity to be able to read everybody's reports like I got your report yesterday, had no time to even look at it. So we do need things in a timely manner moving forward, if possible. that's very important we all have our own jobs and careers and things that we're doing we're doing this on a part-time basis so it's really important that we have all this information so when we do have our monthly meetings we're able to comment on these things so i want an opportunity to look at everybody's report um and then i will come forward with any questions i have or ways i like to look at the rate that's where i am right now thank you okay good i think that concludes our discussion regarding ferry boat matters today may i make a may i make a recommendation sure may i may recommend that each commission scenario of the great the rates as we see it for our next meeting and everybody comes with a proposal and we kind of massage that a little bit see what works best yeah i think it would be um going to be other commissioners also so so the only problem with that is in order to create a a scenario of varying rates we need to agree on what the rate base is because that's what drives the entire conversation we can't just all pick a different rate base you know you commissioner mcgross can't say i want the ferry boat companies to have seven million dollars of revenue and commissioner sam says six million and i say two we we have to we have to agree on what the proper number of of revenue for the ferry boat companies in aggregate is in order to make a rate uh division if you will or rate structure that meets that number and i don't know that we're there yet so i think we have a recognition from our hearing examiner it's obviously been objected to by the ferryboat companies i you know i don't know how we uh unless we're all going to adopt at least in theory the the hearing examiner's 5.1 million dollar number then it's very difficult to come up with a rate structure that means anything yes would you would you identify yourself and who you are on your camera how you're involved yes hi my name is judy torres i am the chief of 2:14:09 stop for Senator-at-Large, Angel Bulkish Jr. My question is are all the ferries charging the same rate? Meaning if I go on a ferry boat for one company and they charge me six dollars but then I go on another ferry company but they're charging me ten. As long as we're talking about the Red Hook and and red hook to cruise bay route this is a regulated rate miss torres and it absolutely should be the same for both companies okay thank you sure thank you for your question um any other comments commissioners thank you commissioner mcgross i don't i don't know that we're all prepared to agree on the rate base number that that we need to go forward with but that's going to obviously be the that is the the number that's the big question here it's why we go through the rate case in general nothing else can really happen until we set the rate base and we have to answer the objections of the ferry boat companies what's been proposed any other comments no okay so let's move on and i'm going to relinquish the chair to vice chair Sam's for the remainder of the meeting which I believe brings us to regulated utilities hurricane preparation. I passed the gavel to to chair nickel Sam's. 2:16:14 Okay, so the next item is this item 3 regulated utilities energy and telecommunication providers. 2026 hurricane preparation and emergency planning and who speaks on that i do jane reynolds legal support specialist jane reynolds legal support specialist um public services commission recognizes it sorry recognizes that it is imperative that the public utilities energy and telecom service providers be prepared to respond to hurricanes and other emergencies by having procedures in place to protect their employees facilities equipment and critical infrastructure on may 11 2026 the pse issued its annual emergency preparedness plan request letter to all regulated utilities energy and telecom service providers of the usbi to be submitted by friday may 29. these plans also help utilities maintain or quickly restore essential services and identify any resource needs for operational challenges that could affect their response efforts we share these plans with vitima so that it can more efficiently prepare and respond the plans we have received thus far are from air voice wireless broadband bi liberty vi i am telecom doing business as infinity mobile one communications barlight ventures virgin islands waste management authority and although we have limits limited to no jurisdiction over t mobile we have received their plans amongst others um we have not received plans from the water and power authority and transportation services of st john thank you which ones have you've received it for that we have not received for wapa and transportation services have we been in contact with them to ask them when they're going to be providing that i sent a reminder email we 2:17:42 um it's not just um wapa and and tsd it's a few more um land communications tempo telecom terracom true connect communications and bi electrons also yeah that's it all right thank you very much anybody have any questions or comments about this part of the agenda um i wasn't sure you got waste management we we have received waste money okay and you mentioned that you didn't receive one communications we have okay you have one okay anybody have any comments or questions just note that is part of our our goal here is every year is to make sure we have updated plans we 2:19:54 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 18 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session share those plans with vitima so that vitima also has current information and can be better prepared and then better responsive in the event reforms thank you okay so the next um the next item on the agenda is number four pfc budget matters and we have a staff report and who will be presenting that okay um good afternoon brenda connor accounts maintenance officer um again good afternoon brenda connor accounts maintenance officer i'm just here to inform the um a commission that the proposed operating budget for fiscal year 2027 was submitted to omb and in the total amount of two million three hundred and five thousand one hundred and twenty eight dollars and fifty nine cents um we will be submitting our testimony to the legislature's finance committee on on or by july 2nd and our budget hiring is scheduled for july 9th at 3 pm does anybody have any comments or questions about that okay so the next item is um item b suspension of rate investigation and who reports on that let's talk about the vi waste management authority first please i do um good afternoon all i am to shawn hendrix the assistant executive director here at the public services commission um the commission is statutorily obligated to conduct rate investigations every five years subsequently the commission engaged the services of hearing examiners to preside over the waste management authority um that would be attorney doles mclean and for the water and power authority um mrs genevieve whitaker in addition to the hearing examiners In the WAPA matters, technical consultants were also selected. 2:21:56 To date, both the Waste Management Authority and the Water and Power Authority has failed to pay several years of outstanding annual assessments. Additionally, WAPA has several unpaid docket-specific assessments. these payments are made to the consultants and we rely heavily on the docket specific assessments to maintain our obligations to our technical consultants and hearing examiners due to our current financial situation staff is informing the commission that we must suspend the rate investigations listed on today's agenda as it pertains to the waste management authority docket 708 that would be the solid waste investigation and docket 707 that would be the waste water and septage rate investigation staff intends to meet with the waste management authority in a couple of weeks to discuss their ability to satisfy the potential obligations from the upcoming rate investigations regarding wapa docket specific assessments for the current fiscal year and previous fiscal years remain unpaid at this present time staff is unable to meet the obligations to the hearing examiners and the technical consultants assigned to all welcome matters thank you miss hindrance do we have any um comments or questions about this uh subject matter i'm gonna start with david do you have any i don't know if director knight's still on the line i mean this this impacts his his rate base his uh base rate case and i i just want to make sure he understands you know we're not moving forward on this um we we haven't any money is he awkward um director knight is no longer online i i could speak to that and he has been very much made aware of that he's both received a letter to that effect and we've had discussions with him regarding that effect um senator joseph do you have any comment um my only comment would be would you suspend 2:23:05 my comment is and i thank staff for providing the report my comment would be do you want to suspend the investigation for what period of time are you looking at until we have funding until you got funding so it could be indefinite cannot proceed without funding i understand i understand we have any actions that we can take against force them to pay at least something this is probably the most dramatic one we can take um as chair hughes commented this will have an effect on WAPA's ability to have any new rights or changes to its right structure going forward. 2:25:18 And WAPA has serious financial issues that need to be addressed. There is, it would be very easy for the Commission to bring a lawsuit and get a judgment against WAPA for the amount of the assessments. It would be ineffective, however, because we cannot execute those judgments against guapa so rather than wasting our time and energy on on a futile lawsuit we are trying to focus on approaching this and it is for that reason that we have notified the governor guapa and the legislators so that we have this issue ongoing we are not looking for a general fund appropriation as a first preference in this but rather we would rather have those utilities comply with the law and make the payments that they are required to make under their assessments and to address the question around time frame we did receive a verbal indication from the water and power authority that they may be able to make good on payments by the end of june early july but until we actually receive payments on hand we're unfortunately unable to proceed with the rate investigations okay and are you looking for full payment or partial payment wapa has indicated verbally that they will satisfy the entire fiscal year of 2026 annual assessments however we rely on docket specific assessments to pay our consultants and we have not gotten a commitment for that anybody else have any more comments on this subject matter okay and that is the last subject matter for today thanks i want to thank everybody for attending and this meeting is adjourned thank you chair 2:26:08 okay now i gotta figure out 2:27:57 Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. VI Update · usvipublicrecords.com · public record, no rights asserted (CC0 1.0) 19 of 20 Public Services Commission (PSC) · PSC Regular Meeting - Regular Session People named in this transcript SUSPECTED, and a finding aid only. Names were matched by machine against the spellings used across all 426 of our transcripts, and the title is the one used in the room. Being named here is NOT evidence that a person attended or spoke · only that the name was said. Speech recognition mishears names, so a spelling may be wrong even where no alternative is offered. 4x Commissioner Clement McGrath heard in this transcript as: McGrath 3x Senator Carla Joseph heard in this transcript as: Joseph 3x Commissioner Laura Nichols-Sams heard in this transcript as: Laura Nichols-Samps, Nichols-Sams Machine transcript · UNVERIFIED. Verify every quotation against the recording. Speakers are not identified. 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