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‘Surplus’ should be passed on to customers: Lawmakers

By Fili Sagapolutele PAGO PAGO, American Samoa (The Samoa News, Jan. 30, 2012) – Lawmakers have reaffirmed their stand that any savings the American Samoa Power Authority gets from being a fuel supplier should be passed on to customers — not to pay down the line of credit for the fuel division. The fuel division appears to have profited during the first quarter of fiscal year 2012.

According to the ASPA first quarter performance report, the authority’s FY 2012 budget is $118.47 million (which was not approved by the Fono) with $34.41 million allocated to the fuel division.

For the first quarter — covering the period of Oct. 1-Dec. 31, 2011 — for the fuel division, total operating revenues (with no grants) were $10.53 million while operating expenditures were $9.75 million, leaving a surplus of $772,147.

And this so-called surplus was questioned by lawmakers when ASPA management team, headed by chief executive officer Andra Samoa, appeared Tuesday during the Fono joint budget committee review of ASPA’s FY 2012 budget.

Responding to the committee’s questions, ASPA chief financial officer Susana Fai’ivae explained that fuel expenses for the authority’s generators are included in the budget of the electric division, while revenues and expenditures listed for the fuel division deal with fuel provided to the private sector.

She said the $772,147 listed in the performance report appears to be a profit but it’s not, because it does not include other updated expenditures, mainly the line of credit at ANZ Amerika Samoa Bank for the fuel division, where the current balance is around $5.8 million

"So you’re in debt as a fuel supplier," House Vice Speaker Talia Fa’afetai Iaulualo quickly pointed out.

He then asked, "So is it fair to say, there is no profit for ASPA as a fuel supplier?"

Fai’ivae replied that there is some profit, but Iaulualo was not convinced, saying that ASPA promised to pass on savings as a fuel supplier but that has not been the case at all. He said ASPA opted to raise rates as well as giving out bonuses to certain employees.

Iaulualo told ASPA management that the government is not ever in business to make a profit, because it’s in the business of serving the public. "If we make money or save money from government services, then you have to reallocate those savings to serve the people," said the Manu’a lawmaker.

Sen. Mauga T. Asuega pointed out that ASPA officials had testified last year that there was also a loan with a local bank and wanted to know the status of this loan.

Fai’ivae explained that the previous loan, which was to pay previous fuel debt, has been paid off and what is left is the balance of $5.8 million for the line of credit that ASPA continues to pay.

"The bank is making money on the interest rate" for the loans and the line of credit "but not ASPA" and customers are not getting a break in the utility rates, said Mauga, who reiterated that ASPA had claimed in the past that savings from being a fuel supplier would be passed on to customers.

"You’re trying to run this like a business but in the end you lose out," Mauga informed the ASPA management team. He also said that ASPA paying out bonuses last year was "made at a bad time, when people are suffering."

The bonuses, which ASPA officials said amounted to more than $50,000, were paid out last October, prompting many public complaints, especially for the fact of the timing — ASPA around the same time hiked its rates for water, waste water and solid waste collection. ASPA officials said that the bonuses are budgeted annually in their personnel costs.

Regarding the rate hike, Iaulualo wanted to know how much ASPA was expecting to collect from the increases. Fai’ivae said the authority was forecasting about $118,000 in revenues per month and this projection was included in the ASPA budget proposal for fiscal year 2012.

Rep. Larry Sanitoa reminded those present that the Fono had asked ASPA to delay the rate hike, because the public was suffering with the high cost of living. "You ignored the Fono’s request for a delay and this shows no respect for the Fono," said Sanitoa.

ASPA chief operations officer Reno Vivao, responding to Sanitoa, said that ASPA could not delay the rate hikes any further, because there are pending projects and other operational costs that need to be funded.

The ASPA CEO reminded the joint budget committee that the Fono had previously requested a delay in late 2010 and ASPA board of directors had complied, which was out of respect for the Fono request.

However, Samoa said, ASPA could no longer put another delay on the rate increase and it had to be implemented so ASPA could come up with funds for earthquake and tsunami recovery matching funds. She echoed Vivao’s statement that ASPA needs these additional revenues for operational costs and other pending projects.

"We apologize to the public and the Fono. We have nowhere else to turn to get revenue to ensure uninterrupted and quality service," said Samoa. "We need these additional revenues."

Meanwhile, both the Senate and House approved last Friday their respective versions of the $60.37 million supplemental budget in FY 2012 for ASPA, covering the next six months up to July 31, 2012.

Both chambers are now going through the process of approving each other’s bill before a final version is sent to the governor before 12 midnight of Jan. 31, which is when the current four-month budget for ASPA expires.

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