CNMI Utility Defers Maintenance, Cuts Loses In Half

admin's picture

Cash flow problems for CUC continue

By Junhan B. Todiño

SAIPAN, CNMI (Marianas Variety, July 7, 2015) – The Commonwealth Utilities Corp. incurred $4 million in losses in fiscal year 2014 or 50 percent less than the over $8 million in losses it incurred in FY 2013, CUC chief financial officer Matt Yaquinto told the CUC board.

"The decrease in losses is due primarily to the deferral of necessary maintenance expenses due to cash flow restraints," he said.

As of June 30, Yaquinto said their total operating expenses had decreased to $4 million while the total accounts receivable increased from $41.5 million to over $46 million.

"This is gross of the allowance for bad debts, which increased from $30 million to over $37 million," Yaquinto said in his financial report.

The purchases for plant equipment reached $5 million, but they were funded by grant money, he added.

He said CUC’s current liabilities have increased to over $30 million although the U.S. Environmental Protection Agency fines and penalties were not recorded in prior years.

"A prior period adjustment was made in the financial statement. This also decreased the net position of the corporation significantly," he said.

As of Sept. 2014, Yaquinto said EPA waived $40 million of the $60 million penalties it imposed on CUC.

According to CUC board member Dave Sablan Jr., if EPA no longer believes that CUC is moving in the right direction by protecting the utilities it may not waive the penalties again.

"So if we want to remove that $30 million [in penalties] we better be doing the right things," he told the board.

[PIR editor’s note: Marianas Variety reported that ‘Commonwealth Utilities Corp. officials on Monday told senators that CUC has 30 days to review the payment proposal of the Commonwealth Healthcare Corp. ... CUC Board Chairwoman Adelina Roberto said nothing has been finalized yet and they will look into the proposal and will arrive at a decision once they are done reviewing it. ... CHCC is proposing to pay CUC $150,000 a month even though its monthly consumption is over $500,000. ... It was not indicated in the agreement how long CHCC intends to make monthly payments of $150,000.’]

Yaquinto also reported that CUC performed repair work on Power Plant 1 including its engine foundations and some scheduled maintenance.

In 2009, he said Power Plant 1 was only producing 9 megawatts of electricity due to the lack of maintenance and the poor condition of its engines.

As of Sept. 30, 2014, he said PP1 was producing 62 MW of power.

On Rota, he added, the power division completed the work it began in 2013 and improved the service on island.

"Work on the power transmission system was completed, upgrading it to a higher voltage, creating better reliability and efficiency. Also, new transformers were procured and installed, which helped improve the network."

In 2014, he said CUC continued improvement efforts in its power division to provide reliable and safe energy in the CNMI as it moved gradually into compliance with the federal stipulated orders.

For water and wastewater, he said they also implemented many improvements in 2014.

CUC, in addition, received $40.9 million in grant funding from EPA for renovating infrastructure and improving the capability of CUC to comply with the Clean Water Act and the Safe Drinking Water Act.

There’s also good progress in identifying, designing, procuring and accomplishing the construction of priority projects since 2014, Yaquinto said.

"Water-operations personnel spent untold man-hours performing leak detection on the water distribution system using state of the art equipment purchased with EPA grant funds. The resulting conservation of water resulted in a year with improved water supplies to customers."

Rate this article: 
No votes yet

Add new comment