10.7 pct. reduction in LEAC rate eyed

 The Commonwealth Utilities Corp. and the Commonwealth Public Utilities Commission’s independent consultant yesterday proposed a 10.7-percent reduction in the existing levelized energy adjustment clause, or LEAC rate.

CUC and Georgetown Consulting Group Inc. recommended that the new LEAC rate take effect on Nov. 17, 2011.

In their joint stipulation presented to CPUC chair Viola Alepuyo yesterday, the two asked that the existing LEAC rate of $0.34426 per kilowatt-hour be lowered to $0.30791 per kWh.

The proposed new charge is composed of the following elements: fuel and lube oil element ($0.28761); volatility allowance for uncertainty of fuel price ($0.01783); and regulatory/technical support ($0.00247).

According to Georgetown consultant Larry R. Gawlik, the new LEAC rate will reduce utility bills by 10.7 percent, particularly among the vast majority of CUC residential customers who consume an average volume of less than 500 kWh a month. He estimates residential customers in this category to comprise about 70 percent of all CUC customers.

Customers using twice the average kilowatt-hour, meantime, will see a decrease of about 10 percent in their monthly billing. The rest of CUC’s customers, including government and commercial businesses, are projected to see an 8.8-percent decrease in their monthly billing.

Prior to yesterday’s public hearing, CUC filed a petition seeking a rate reduction of only 4 percent-from the existing LEAC rate of $0.34426 per kWh to $0.33040 per kWh. Georgetown, however, also earlier filed a different rate reduction-from $0.34426 per kWh to $0.30370 per kWh-based on a lower projected cost of diesel oil and improvements made in the production efficiencies at CUC power plants.

Saipan Tribune learned that the new 10.7 percent rate cut was finalized yesterday morning after a series of meetings and consultations between CUC and Georgetown.

According to the joint stipulation, the proposed rate represents the required fuel and lube oil-related expenditures estimated for the period from Nov. 1, 2011, to Jan. 31, 2012.

The CPUC, which only has Alepuyo as its sole member, is expected to decide on the proposal at a meeting later this week.

CUC’s monthly electric charges are composed of two rates: the base rate, which pays for the day-to-day operations, personnel, and construction of CUC, and the LEAC rate, which pays for the cost of diesel fuel needed to generate electricity. LEAC charges comprise 75 to 80 percent of total monthly bills.

The CPUC last approved a 22-percent increase in the LEAC rate in April this year, following unprecedented increases in world oil prices.