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Rate hikes necessary and overdue, officials say

By Ferdie de la Torre

SAIPAN, CNMI (Saipan Tribune, June 9, 2008) – Commonwealth Utilities Corp. (CUC) executive director Antonio Muna said that, except for the Fitial administration, no other administration had the courage to actually implement 100 percent cost recovery for utilities.

Referring to the newly increased electric rates, Muna said the Fitial administration is focused on fully resolving CUC's problems and is the first one to go with full cost recovery.

"No other administration has ever done this. And they could have done that if those [past] administrations had done 100 percent cost rate recovery," the CUC official told the media.

He said the overhaul of power engines could have been done before if past administrations implemented the full cost recovery rates.

"It has to be done now," Muna stressed.

The executive director said CUC has been neglected for the past four to five years.

"A lot of things that I'm saying to you right now about engine conditions, a lot these things have been the case for the last four, five years. So what else is new?" he said.

Muna said the Fitial administration is focused on getting things resolved at CUC by trying to find solutions since the start.

One of the solutions they first did, he said, was to seek a $40 million loan from the Retirement Fund and to get the Commonwealth Development Authority loan forgiven. "You need to get that loan situation with CDA resolved because you can't go and borrow money until you can clean that off the books and not have that liability there," he said.

As for the $40 million Retirement Fund loan, had CUC gotten that money, a lot of the overhauls the utility agency is doing now could have been done in 2006, he said.

He also mentioned the administration's power privatization project as an option, despite knowing that CUC is short on capital.

"So we tried to do that with our privatization of the.what we call the franchising of the utilities.get someone a franchise to produce power here on Saipan, to sell power here on Saipan," he said.

Unfortunately, Muna said, the project encountered problems with the Office of the Public Auditor.

The official said that, although the Fitial administration just inherited all these problems at CUC, it has really been active in finding solutions.

"Unfortunately a lot of the solutions that we put on the table ran into obstacles," he said.

Muna said that Fitial, however, is getting assistance from the Office of the Insular Affairs by securing a potential additional $4 million to help continue with the rehabilitation of the engines.

"We got the alternative energy RFP [request for proposals]. We're looking at temporary power [and] bringing that on board. We're looking at tapping into excess power from the hotels. So we're not sitting idle. We're trying to solve the problems," he added.

Saipan Tribune

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