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Troubled utility unable to pay bills

By Gemma Q. Casas

SAIPAN, CNMI (Mariana Variety, May 5, 2008) - The Commonwealth Utilities Corp.’s former executive director warned the Fitial administration that rotating power outages on Saipan are here to stay unless the financially troubled agency secures funding to pay for its costly diesel fuel.

CUC projects to incur a revenue shortfall of US$19.5 million -- US$11.3 million in terms of fuel and operating costs and US$8.2 million in non-fuel revenue -- by the end of Fiscal Year 2008.

The non-fuel revenue shortfall was attributed to the public’s conservation efforts after CUC doubled its power rates.

Anthony Guerrero, the former CUC executive director, informed Gov. Benigno Fitial on Friday that the skyrocketing fuel prices are not only taking its toll on power plants but on public water wells and sewer facilities as well.

"Without an outside source of funding, it is inevitable that load shedding is here for the long term. For how long, no one knows. But if no action were taken, CUC will eventually exhaust all its funds and cease to be operational at any level," said Guerrero.

"This means that electric service as well as water and wastewater services, which are essential to the health and welfare of the residents of the commonwealth would no longer be available. If this were to occur, the commonwealth would surely face a severe crisis, if not a calamity. Time is of the essence," he added.

Authorities said CUC is trying to keep the load shedding at a maximum of two hours daily in any location to prevent potential coliform bacteria from developing into the water that CUC produces.

The chlorination process of CUC water stops without electricity because they have no back-up generator, Variety learned.

According to Guerrero, CUC has been buying fuel in small amounts from Mobil since February due to budget constraint.

The fuel supplier was to deliver 20,000 barrels of fuel as early as Friday but CUC cannot come up with the full payment of US$3.1 million.

"Currently, CUC has no funds available for this purchase. Thus, CUC would have enough fuel to operate power plant 1 under normal conditions until about May 7, at which time the fuel supply would be exhausted," said Guerrero.

"The fuel supplier has expressed concerns about CUC’s inability to accept in full recent tanker deliveries. Specifically, the supplier raised the issue of additional tanker demurrage and associated shipping costs of US$250,000 that it incurred as a result of the partial purchases," he added.

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