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CUC sees $200K overrecovery in LEAC’s 1st month
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Posted on Jan 26 2009
The Commonwealth Utilities Corp. is projecting an overrecovery of approximately $200,000 for the first month since implementing the levelized energy adjustment clause, LEAC.
In December, the Public Utilities Commission adopted the LEAC for CUC, which sets the utility rates for six months, although the first LEAC was set for three months. The adjustment clause replaced the electric fuel rate that fluctuated monthly. The current LEAC is 23 cents per kilowatt-hour. Under the LEAC the projected fuel costs per gallon was $1.66 for January for Saipan; $2.08 for Tinian; and $2.17 for Rota. But CUC paid about 10 cents less per gallon, according to CUC executive director Antonio Muña.
But, Muña said, it’s important to remember that the utility agency will not see final customer payments right away.
“Bear in mind [that] when we start actually collecting for the January fuel costs, it won’t be until March” because of lag time, Muña said, adding that it’s nice to know there is a cushion between the price of fuel and the projected revenue.
Under PUC’s rules, if overrecovery or underrecovery reaches $350,000 or more, PUC may approve a change in the LEAC price before the end of the six-month period.
“This is the nature of LEAC,” the director said. “On one month you could be under. Another month you could be over. That’s why this process is revisited. Instead of changing rates every month, it gives everyone a plan for a budget.”
Muña said that in case of an overrecovery a change in the LEAC would probably not occur until close to the end of the six-month period.
January’s surplus will cover any underrecovery realized in February, Muña said. CUC estimates that the price of fuel for February will exceed the LEAC’s projections per gallon.
Any additional money earned each month is distributed among four accounts. One account is used for fuel and other costs related to the fuel supplier; another for building a reserve in order to have a 30-day supply of oil; another is to fund PUC regulatory fees; and the last account is to fund a reserve for power generation measures.
