Cost of service study the purpose of a cost of service study is to determine the revenue requirement of the utility, how to functionalize those costs, and then how to allocate those costs to each…

The U.S. Department of the Interior's Office of Insular Affairs awarded a $400,000 Project Grant to the Virgin Islands Water & Power Authority (VIWAPA) under the Economic, Social, and Political Development of the Territories program (CFDA 15.875) on November 1, 2025, with a completion date of September 30, 2030. The grant funds a comprehensive cost of service study that will analyze VIWAPA's revenue requirements, cost functionalization, and cost allocation across customer classes using detailed operational data from the utility's Advanced Metering Infrastructure (AMI) system. The study will evaluate how existing utility rates are recovering costs from different customer classes and identify areas of cost under- or over-recovery.

The deliverables include a detailed cost of service analysis that will inform the development of new rate structures, such as standby tariffs and partial requirements tariffs, to support customer retention and cost recovery from entities with self-generation capabilities. The project will also assess emerging technologies and associated outage data to determine whether new customer classes or subclasses should be created and evaluate the feasibility of implementing specialized rates, including recommendations for interim proxy rates pending collection of additional data. This foundational analysis will guide VIWAPA's rate structure modernization efforts and support sustainable utility operations across the U.S. Virgin Islands.

Cost of service study the purpose of a cost of service study is to determine the revenue requirement of the utility, how to functionalize those costs, and then how to allocate those costs to each customer class. The cost of serving a utility's different customer classes can be used to assess the effectiveness of existing rates in adequately recovering the utility's costs from each of its customer classes. The results of the cost of service analysis will provide the virgin islands water and power authority (viwapa) with a detailed understanding of the degree to which existing rates are under or over recovering the costs to service its existing customer classes. Additionally, the cost of service analysis will serve as a foundation for viwapa to develop new rate structures, e.g. standby tariff, partial requirements tariff, etc., to retain and/or recover customers who wants to self- generate. The objective of the project is to update the cost of service study using the more detailed data made available through viwapa's AMI system and to use the resulting analysis to inform the development of new rate structures. The analysis will evaluate these new technologies as well as the available data associated with them, e.g. unforced outage timing and duration, scheduled outage timing and duration, etc., in order to allocate costs appropriately to either new customer classes or subclasses within existing classes. Performing such a data assessment will inform the viability of developing such rates now, or putting in proxy rates for some interim period while the necessary data is collected for a more robust assessment in the future. This assessment will inform what the cost of service study needs to include for these new technologies.