‘Govt agencies must pay fair share to help avoid problems down the road’

Commonwealth Utilities Corp. executive director Alan Fletcher said he is pleased with the Supreme Court’s recent decision and reiterated that government agencies must pay their fair share to help avoid problems down the road.

Earlier last week the Supreme Court made a ruling that CUC can file a lawsuit against the CNMI government.

“We are pleased with the Supreme Court ruling and that it supports CUC’s efforts to receive timely payments for utilities from government agencies. We will continue in our current collection efforts as directed by our board,” Fletcher said.

According to Fletcher, CUC and its board members have tried to find ways to work with the government and were consistent in its willingness to work with agencies on collections.

Fletcher describes it as a “two-way street.” “Efforts must be made to pay current monthly bills and make payment arrangements for payment of arrears, unfortunately, this has not occurred.”

CUC’s sole source of guaranteed revenue to pay for operations is rate revenue and it remains in a fragile financial state due to government receivables of approximately $28 million.

Earlier last month, the CNMI central government was issued disconnection notices for not keeping current with CUC.

On their last board meeting in December, board members spoke of how the government should pay current bills and find payment arrangements in past arrears, so that residents and those keeping current wouldn’t have to subsidize the government’s outstanding account receivables with higher utility bills.

“As discussed many times, these arrears require CUC to defer maintenance, delay purchasing inventories, and results in a lack of funds for capital projects,” Fletcher said.

Fletcher said that in addition to the outstanding debts by the government, CUC projects a $10.7 million reduction in expected revenues due to legislative actions.

In fiscal year 2015 alone, there is a reduction of $1.7 million in water and sewer due to Public Law 18-99 that reduces the Public School System’s rates, $4 million reduction in general revenues from Public Law 18-71 allowing $5 million credit to PSS and the Commonwealth Healthcare Corp, according to Fletcher.

“This represents over 25 percent of CUC’s non-fuel and operations budget and underscores the importance of receiving monthly utility payments in full and in making a real effort to pay back arrears. Also, it highlights the importance of conducting solid technical and economic analysis prior to enacting laws,” Fletcher said.

“While possibly well intentioned, reductions in CUC’s revenues, without considering the operational consequences will lead to trouble. Simply, government agencies must pay their fair [share] to help avoid problems down the road,” he added.