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Commonwealth Utilities Corp. owes unpaid employer contributions

By Moneth Deposa SAIPAN, CNMI (Saipan Tribune, Nov. 24, 2011) – The Commonwealth Utilities Corp. is disputing the amount the NMI Retirement Fund wants to collect as payment for unpaid employer contributions, arguing that a provision of a public law protects the utilities company from any increases in the employer contribution rate.

Under the Fund's calculation, CUC owes the Fund about $4 million in unpaid contributions. This, according to CUC chief financial officer Charles Warren, is a big variance from what CUC believes it owes the Fund.

"CUC contends it owes the Fund about $2.8 million less than what the Fund thinks it's owed. Our position is based on application of Public Law 16-2," he told Saipan Tribune yesterday.

P.L. 16-2 revises the CUC utility rate structure to ensure its continuing ability to deliver utility services and to provide the governor flexibility to reprogram funds for fiscal year 2008, among others. A provision in this law also suspended the implementation of the employer rate contribution to some agencies, including CUC.

Warren disclosed that the Fund initially offered to settle the $4 million unpaid obligation. "Actually, the offer was made by them and declined by CUC," he said.

Fund chair Sixto Igisomar earlier told Saipan Tribune that the CUC offer is not that easy to be decided but said the board has three options: accept it, decline it, or counter it. "We made the decision to counter their proposal," he had said.

Saipan Tribune learned that CUC, in its proposal, cited some differences in how the Fund determined the total debt of CUC.

The utilities firm cited statutes to justify its argument that the Fund used the "wrong calculation" to come up with its figure. CUC's number, it was learned, only amounts to more than a $1 million obligation. If the Fund will agree to the amount determined by CUC, the agency will be committed to paying the obligation.

Last May the Fund sued the utilities company for not paying it employer contributions and demanded payment of $4.44 million, including penalties and damages.

It was earlier reported that CUC is delinquent by some $3.1 million as of April this year. The Fund is seeking penalty amounting to $740,462 through end of fiscal year 2010 and economic damages amounting to $527,716.

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