“The LEAC rate is unquestionably higher than required and should be reduced,” Georgetown said, adding that the current rate is set at an effective fuel price of $3.55 per gallon, inclusive of the “volatility elements.”
Georgetown said current price of fuel oil and the Oct. 2011 gas oil futures are at less than $2.90 per gallon or a difference of 65 cents per gallon.
Georgetown is expected to submit its LEAC status report today during a special business meeting of the Commonwealth on Public Utilities Commission.
The report will include the reconciliation of any past over or under recovery of fuel oil revenues collected from consumers by CUC.
CUC deputy executive director Alan W. Fletcher said he and legal counsel Deborah Fisher will attend the meeting.
He said they learned about CPUC meeting in last week’s newspaper notice and received a copy of the LEAC report on Monday.
“Coupled with the last minute receipt, Charles Warren, CUC’s CFO, is off-island until Friday, so this timing has left us without our local expert or the time to fully review the report and respond,” Fletcher told Variety.
Georgetown said the LEAC rate is the most significant element of CUC’s electric rate structure.
On an annual basis at current oil prices, it represents the collection from residential, commercial, and government electric consumers of $80 million of CUC’s total electric revenue of approximately $100 million, Georgetown said.
“It is critical that the protocol associated with CUC incurring fuel oil expenses and its collection of LEAC revenues be fully transparent to consumers and carefully monitored by the commission,” Georgetown said.
It added that the LEAC rates adopted by CPUC were a direct reflection of rapidly changing world-wide oil market conditions resulting from an increase in the demand for fuel oil and price volatility.
A number of factors have either a direct or indirect impact on the LEAC rate and are uncontrollable, Georgetown said, adding that the principal factor is the high cost of fuel oil.
Georgetown proposed that within 30 days, CPUC set a hearing date to consider a new LEAC rate for the period Nov. 2011 through March 2012.
