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Currently unable to cover fuel price increase

By Junhan B. Todeno SAIPAN, CNMI Islands (Marianas Variety, Jan. 10, 2011) - Saying it is facing an immediate crisis in paying for fuel to generate power for the people of the Commonwealth of the Northern Mariana Islands (CNMI), the Commonwealth Utilities Corp. (CUC) is requesting for a power rate increase without the required public hearing.

CUC chief financial officer Chuck Warren said "as long as oil prices remained stable, the size of the large weekly cash payments CUC must make to Mobil Oil were predictable."

But, he added, oil prices have been increasing quickly over the last few months and the current Levelized Energy Adjustment Clause (LEAC), rate is no longer sufficient to cover Commonwealth Utilities Corp’s oil bills, he said.

Commonwealth Utilities Corp’s supplier, Mobil Oil, has advised the agency that prices will continue to rise, Warren said.

He noted that Mobil’s past predictions have been highly accurate, adding that the oil firm uses reliable economic forecasting tools for its projections.

He said CUC has no other source of oil than its contract with Mobil, and this has been reviewed by the Commonwealth Public Utilities Commission.

CUC must pay monthly in cash.

Commonwealth Utilities Corp’s budget assumes that the Levelized Energy Adjustment Clause rates fully cover the cost of oil, Warren added.

"There is no other source of funding to continue CUC’s operations. As oil bills increase, Commonwealth Utilities Corp. will have to stop paying for its only source of fuel, with resultant blackouts," he said.

He added that CUC will also be put in immediate danger of violating the U.S. District Court’s stipulated orders.

On Dec. 30, 2010 CUC filed a request with Commonwealth Public Utilities Commission (CPUC) to adjust its base electric levelized energy adjustment clause rate.

CUC requested for a US 2.243 cents per kilowatt hour (kwh) increase or from US 24446 per kwh to US 26688 per kwh.

Warren said members of the public are invited to attend the CPUC meeting on Jan. 11, Tuesday, starting at 10 a.m. at the Family Building in Garapan across from the Bank of Saipan on Garapan Road.

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