CUC wants govt to retire $28M arrears

The transition report made public by the Committee of Transition on Tuesday included a number of recommendations from the Commonwealth Utilities Corp., foremost of which is for the government to pay its utility bills in full each month and to create a payment plan for retiring the CNMI government’s $28 million arrears.

“CUC continues to operate, but is in a fragile financial position. Government arrears create pressure on operational funding and continue a practice of short-term crisis management to the detriment of consumers and CUC’s ability to meet stipulated orders requirements,” the report reads.

The utilities company also recommended that the Legislature resist ratemaking and the temptation to intervene in utility operations by bypassing the CUC board and the Commonwealth Public Utilities Commission regarding rates, fees, charges, and policies.

CUC pointed out that in fiscal year 2014, legislative actions reduced CUC’s revenues by $10.7 million—about 25 percent of its operating budget.

These laws include Public Law 18-19 ($1.7 million), which lowered the Public School System’s rates; PL 18-66 ($4 million), which lowered the utility payments of the central government; and House Bill 18-216 HSl ($5 million), which seeks to reduce PSS and Commonwealth Healthcare Corp. receivables. The latter is pending the governor’s approval.

‘It also wants the government to require all existing self-generating businesses and new commercial development to connect to the CUC system.

“Do not allow self-generation except for emergency back-up generation. This will lower the price for everyone,” said CUC.

The Committee on Transition and the Transition subcommittee, which reviewed CUC, however, does not agree with this recommendation in light of CUC’s current unstable financial situation.

“The presence of Best Sunshine integrated resort development alone will deplete the current power reserves available from CUC,” the transition committee countered.

CUC said the Water Task Force is no longer needed as it duplicates its work and competes for limited grant funding.

“The WTF was created as a temporary entity over 10 years ago to manage grant monies and those services are no longer required. Please note CUC pays for WTF’s employees, yet they have no management oversight or board of director’s control over their activities.”

CUC also is calling for the government to allocate public lands for new power resource supplies.

“The issues of siting a new power plant, of any technology, are a major impediment in developing new resources. CUC respectfully asks for support in siting new facilities on public lands to ensure cost effective development.”

The Transition Committee recommended that any additional public land grant to CUC should be appraised and the value to be offset from the government’s utility expenses.

The utilities company also recommended that the government appropriate more funds to cover current utility expenses and those in arrears for each government agency.

It said CHCC, PSS and the central government represent the largest accounts receivable accounts for CUC.

Upon completion of all stipulated order requirements, CUC said the agency and the CNMI government should conduct a feasibility study/business model to separate power and water/wastewater divisions.

“Power services have always been subsidizing water and wastewater services in the CNMI.  Separating these utilities will allow management to focus on a particular area and the true costs of operation will be determined. In most U.S. jurisdictions, power and water/wastewater are separate entities,” it said.

The Committee on Transitionis headed by chair Gregorio M. Camacho and vice chair James Ada. It also has nine-member panel made up of Rufin S. Inos, Edward C. Deleon Guerrero, Esther S. Fleming, Mathilda A. Rosario, Rep. Angel A. Demapan (R-Saipan), and Torres’ brothers Vince, Victorino, and Joaquin.