CNMI CONSIDERS 2-CENT HIKE IN POWER RATES

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Monthly bills would show 0.22 per kilowatt hour

By Kristi Eaton

SAIPAN, CNMI (Saipan Tribune, Dec. 18, 2008) - Officials from the Commonwealth Utilities Corp. and the Georgetown Consulting Group are recommending that the Public Utilities Commission set the new power rate at US$0.22989 per kilowatt-hour, in addition to the set base rate.

The new rate, which would go into affect January 1, 2009, would be a 2-cent increase over the December rate of US$0.207.

Currently, CUC changes the fluctuating fuel rate monthly, based on the price of oil. For the month of December the rate was US$0.207; it was US$0.270 in November.

Under the proposed new rate, residential customers using less than 500 kWhs would pay US$0.22989 plus the base rate of US$0.016 per kilowatt-hour, for a total of US$0.24589 per kWh.

The new rate would be the first of the proposed levelized energy adjustment clause, or LEAC. Georgetown and CUC recommend implementing a LEAC that changes every six months.

PUC will vote on the changes this weekend. PUC is tasked with setting new rates before Dec. 31, the date set by law, or CUC must roll back rates to US$0.17 per kilowatt-hour.

CUC and Georgetown are recommending the first LEAC only be implemented for three months. The following rates would be set every April 1 and October 1 to coincide with the fiscal year. They also recommend further evaluation before setting new base rates.

The LEAC is based on a formula using four factors. Three factors are totaled: the projected fuel expense for the coming LEAC period; the difference between the fuel revenue and actual fuel expenses as approved by the PUC; and refunds or credits from the supplier, excluding legal settlements. Those factors are divided by the projected retail kilowatt-hours for the next six months to develop the LEAC rate.

The two parties are also proposing that PUC set a threshold of US$350,000 that, when reached, CUC could petition to have the rates changed.

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