STYMIED MARIANAS UTILITY IN ‘DIRE STRAITS’

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By Zaldy Dandan

SAIPAN, CNMI (Marianas Variety, Jan. 8) – The Commonwealth Utilities Corp. says it is now paying US$119 for a barrel of the fuel it needs to run its power plants in the Commonwealth of the Northern Mariana Islands (CNMI), but will continue to charge most of its residential customers the current power rate of 25.8 cents per kilowatt hour.

This rate will remain in force this month, but CUC spokeswoman Pamela Mathis yesterday said it might increase in February, depending on the price of oil which the agency purchases from Singapore.

Although the price of oil in the international market is $100, Mathis said their fuel supplier, Mobil, also has to pay the cost of shipping, taxes and other add-ons.

She said under the controversial power rate cut law, or P.L. 15-94, CUC can only charge residential customers the electric fuel rate, which is currently at 25.8 cents per kwh if they use less than 1,000 kwh a month.

Most residential customers use about 600 kwh. If they use over 1,000 kwh, CUC is allowed to charge a non-fuel rate of 4.4 cents per kwh on top of the fuel rate of 25.8 cents.

P.L. 15-94 was enacted after lawmakers overrode Gov. Benigno R. Fitial’s veto.

Still, because of the equally controversial CUC emergency regulations signed by the governor in November, the agency can charge a fluctuating rate that depends on the price of oil.

"Residential customers are only paying the cost of fuel," Mathis said. "Not the cost of power generation, maintenance, high voltage lines, among other things. Residential customers are not paying for the real cost of the power they use and this is why CUC continues to have a huge cash-flow problem. CUC is in dire straits financially."

Mathis said they want the emergency regulations signed in November made permanent.

She added that CUC incurred a big shortfall in December — a loss of $3 million — "due to the poor legislative action to cap rates below the world fuel price," referring to the enactment of P.L. 15-94 which reduced the power rate for residential customers to 17.6 cents per kwh.

Asked about the governor’s extension of the CUC state of emergency, Mathis said: "That issue ties into the government making up for these losses to ensure the delivery of fuel. The administration corrected the problem caused by P.L. 15-94 and practically assisted in the payment of the last fuel shipment."

She added, "My understanding is that the partial payments for fuel that were made possible via the state of emergency will come from future government billings, so not only is the government is up to date in its utility payments, it’s making advanced payments to CUC and that means CUC’s cash flow will continue to take a hit. One month of ill-advised legislation has long lasting negative implications. Can CUC pay for fuel? No. CUC had held its own and had begun to make operational improvements in generation, water, etc., until lawmakers dabbled in rate-making of world oil futures while not providing customers or the utilities agency a source of money for fuel payments. This outcome was well-stated prior to the veto override."

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