CNMI POWER UTILITY SEEKS 3 PERCENT RATE HIKE

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The utility faces annual operating loss of $5.6 million

By Moneth Deposa SAIPAN, CNMI (Saipan Tribune, Nov. 16, 2010) – In Northern Mariana Islands, about a month after the Commonwealth Public Utilities Commission (PUC) turned down the Commonwealth Utilities Corp.'s (CUC) proposal to increase power rates in the next six months, the utility agency is proposing yet again another rate hike, this time a base electric rate adjustment.

[PIR editor’s note: According to figures provided in this story, the CUC is proposing to raise residential power rates by about three percent.]

In the proposal it filed with the commission on Wednesday, CUC said the proposed adjustment in its base electric rates would translate to an increase of about US$4.18 per month for the typical residential customer, and US$28.30 per month for small businesses.

If approved, the increase would not appear on customers' bills until April 1, 2011, according to the PUC's schedule.

According to CUC chief financial officer Chuck Warren, the rate change would cover a projected yearly operating loss of US$5.6 million. He said the utility's electric division spends US$32 million every year to provide electricity to its customers.

CUC executive director, Abe Utu Malae said the new cost must be absorbed in order to ensure the continuous supply of power on the islands.

"If we are going to keep the lights on we must cover our new costs. Right now our power plant has virtually no spare parts, many of our power distribution are failing, and our old trucks can't get our people out to the customers' job sites," said Malae in a statement yesterday.

According to Malae, much of this "base rate" increase is in response to a federal court order for CUC to clean up and prevent oil pollution.

"The order demands people, equipment and construction that federal grants will not fund. [As an example] our large oil pipeline in Lower Base won't stop leaking. We must replace that pipeline before it pollutes the lagoon and the Environmental Protection Agency [EPA] demands it," he explained.

On behalf of CUC, Malae apologized to the public for the proposed rate hike. "I must apologize. These are tough times and it is difficult to be asking for even these few dollars of rate increase at this time. We really have tried to operate off of new efficiencies and federal grants before asking our customers for this base rate increase. We hope that our customers understand CUC must keep the lights on and the pumps in our water and sewer systems pumping. And we need this money to do it."

CUC officials said this is its first increase to its minimum monthly charges in a decade. All other electric increases, they said, have been "pass-through" to the oil supplier so CUC could buy the oil that it burns to make electricity.

CUC's proposed base rate hike indicates that the average residential ratepayer would experience an increase of US$3 to US$4 monthly in their monthly electric bill.

CUC said that higher volume users and commercial customers would experience higher increases because about two-thirds of every customer's bill pays for oil.

Saipan Tribune learned that the typical residential customer, at 500 kilowatt-hours per month, pays a total of US$136 monthly and roughly US$90 is used to pay Mobil Oil for the diesel oil used in CUC's power plants. The base rate increase would add US$4.

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