CUC, Georgetown to present joint petition on LEAC rate reduction

The Commonwealth Public Utilities Commission is expected to hear today the specific details and reasons of the proposed reduction in the existing levelized energy accrued adjustment clause, or LEAC rate, which the Commonwealth Utilities Corp. and the commission’s consultant, Georgetown Consulting, have earlier recommended to CPUC.

CUC deputy executive director Alan Fletcher said a final LEAC rate is expected to be presented today to the commission through a joint petition from both CUC and its consultant.

The LEAC rate is a component of the power bill that reflects the cost of fuel. It is supposed to go up or down to reflect the cost of buying fuel to run the power plants.

“We’re still meeting today to finalize the figures. We have to get through the negotiation and all the works involved with the very complex model and we’re expecting to present that final number [to PUC] tomorrow [today],” Fletcher told Saipan Tribune yesterday afternoon.

Fletcher refused to give any figures as to CUC or Georgetown’s recommendation for a new LEAC charge.

But based on the commission announcement last week, CUC and Georgetown have filed on Oct. 27 a new LEAC rate for the period of Nov. 18, 2011 through March 31, 2012. The current LEAC rate is $0.34426 per kilowatt-hour and was recommended to be lowered down to $0.30265 per kWh. The PUC statement indicated that CUC and Georgetown will file position papers to the commission documenting this recommendation. After today’s public hearing on the issue, PUC is expected to make a decision on its business meeting set on Nov. 17.

But Fletcher told Saipan Tribune yesterday that because both parties have yet to reach an agreement for a new LEAC rate, he described the filing figures as “preliminary” numbers. The deputy executive director said the joint petition will be ready by Sunday evening.

Georgetown earlier said that CUC’s LEAC is unquestionably higher than required and should be reduced at the earliest date possible.

However, CUC countered this recommendation citing there was no evidence of over-recovery and asserted that the analysis is based on incorrect and unsupportable assumptions. It also said that there is no economic impact for a refund of any alleged LEAC over-collections at this time.

Under the LEAC tariff that was established by PUC in December 2008, LEAC rate is being calculated every six months.

CUC has recommended the abolishment of the LEAC tariff and wants to develop the monthly fuel adjustment clause, or MFAC. CUC described the current calculation of LEAC as very complex.