Comprehensive analysis on revised LEAC model underway

The Commonwealth Utilities Corp. and the CNMI Public Utilities Commission’s consultant, Georgetown Consulting Group, will be meeting in a three-day conference in Dallas next month to discuss the revision of the current levelized energy adjustment clause model.

Both parties agreed to the meeting during the commission’s Nov. 19 business meeting.

CUC’s fuel expenditures are subject to a semi-annual public review, after which PUC sets a prospective LEAC rate for the next six months, subject to adjustments to ensure that consumers are neither over- or under-billed for CUC’s fuel expenses.

There is now a move to shift from the LEAC model to MFAC, or monthly fuel adjustment clause, where the fuel rate would be calculated on the first day of every month, instead of every six months.

A bill is currently pending at the Legislature, Senate Bill 17-84, which proposes the same concept.

CPUC chair Viola Alepuyo, who earlier opposed the bil, has asked CUC officials for their opinion about this proposal and their experiences with the LEAC method.

CUC chief financial officer Charles Warren told the commissioner that CUC has no problems with LEAC. However, due to the complicated process involved in its calculation, CUC believes it is advisable and practical to adopt an easier method, like the MFAC.

In the past three years since the creation of the LEAC model, he said a significant amount of time and resources have been utilized to come up with a final figure, all of which are shouldered by CUC.

“There’s nothing wrong with the [LEAC] concept, but one of our issues is that this model is complicated. We try to look for a simpler way and CUC believes that there’s a better way to address that. I do agree with the premise that it’s nice to have a number for six months but it would be more difficult for our customers to budget [their monies] especially in this time of austerity. Sometimes, a six-month period is not good,” Warren told Alepuyo at the meeting.

Warren disclosed that the Dallas meeting is set on Dec. 15 to 17 and presentation of the revised model will be in January.

Warren told Saipan Tribune that the meeting will be costly for CUC if it is held on island.

“If the meeting was here, I anticipate that Georgetown would fly two, and perhaps three consultants here. CUC would most likely fly two consultants here. Plus, the hearing examiner will be attending the meeting. So, just on airfares alone, I expect CUC to save $5,000 to $8,000,” Warren told Saipan Tribune.