CUC to seek electric base rate increase

The Commonwealth Utilities Corp. will file an emergency petition to increase its electric base charge before Dec. 8 to offset the higher employer contribution rate it will pay the NMI Retirement Fund this fiscal year.

Details of the emergency petition will be finalized with CUC’s consultant, economists.com, and the Commonwealth Public Utilities Commission’s consultant, Georgetown Consulting Group, said CUC chief financial officer Charles Warren.

“The primary reason for this emergency base rate petition is the employer contribution rate for defined benefit plan members, which has significantly gone up this fiscal year,” he told Saipan Tribune.

The NMI Retirement Fund increased the 37 percent employer contribution rate to 60 percent effective Oct. 1, 2011. Warren said this will result in about $1 million additional cost for the power division.

He said percentage of the proposed base rate increase is not final yet.

“We’re still working on the numbers and the primary reason for this is because the employer contribution rate for the DB plan has gone up from 37 percent to 60 percent of the payroll. .We need to file an emergency petition so we can afford to pay the retirement plan,” he said.

A customer’s power bill is composed of two parts: the levelized adjustment energy clause, which pays for the fuel cost, and the base rate, which is used to pay for power plant maintenance, personnel, independent power producers, and other operational expenses.

The utilities commission last approved a base rate hike in June this year, which resulted in a 1.9-percent average increase in the power bill of residential customers and a 5.1-percent increase for commercial and government customers.

Besides the increased employer contribution rate, Warren said that CUC power customers and the volume of kilowatts sold have significantly dropped in the last few months.

“The number of consumers for power and the amount of power being consumed have fallen about 20 percent since the last base rate case so we need to make up the difference somehow,” said Warren.

From February to November, CUC’s actual kilowatts sold in volume declined by 20 percent while customer count went down by over 1,000, he said.

CUC officials earlier reported to the commission that electric sales have dropped and, with a weak CNMI and world economy, electric sales are projected to fall further.

Saipan Tribune learned that CUC lost almost 1,000 electric customers, about 6 percent, from September 2010 to September 2011. Electric sales also declined dramatically from 255 million kWh in fiscal year 2010 to 234 million kWh in fiscal year 2011-a decline of about 9 percent.

Warren disclosed that CPUC will decide on three CUC matters at the January business meeting. These include the emergency base rate petition that will be filed next month, the proposed water and wastewater rate increase, and a new LEAC rate case.

The commission had just approved on Saturday a 10.7-percent reduction in the LEAC charge, but this rate is effective only until Jan. 31, 2012. CUC will have to petition for a new LEAC rate after that date.

The commission has tentatively scheduled a public hearing on the three cases on Jan. 20, 2012. It is expected to decide on these matters at the Jan. 26, 2012, business meeting.