‘CUC must recover loss from the other customers’

If the Commonwealth Healthcare Corp. fails to pay its utility bills—now amounting to $14.7 million—the Commonwealth Utilities Corp. must recover that lost revenue from residential and commercial customers, translating to a 19.9-percent increase in their monthly bills, according to CUC executive director Alan Fletcher yesterday.

CUC legal counsel James Sirok called Fletcher to the witness stand at a hearing in Superior Court to explain the impact of CHCC’s non-payment of bills amounting to $14,686,022 as of Jan. 2015.

The hearing was on CUC’s motion to hold CHCC in contempt for allegedly ignoring a $1.3-million bill for utility services for three months. CUC alleged that the nonpayment caused CHCC’s total overdue balance to balloon to $14.7 million.

Associate Judge David A. Wiseman placed the matter under advisement. He said he will issue a written ruling shortly.

After CHCC chief executive officer Esther Muña completed her testimony, Sirok asked the court to allow Fletcher to testify about CUC’s analysis of CHCC receivables and the effect it will have if CHCC fails to pay CUC.

In his brief testimony, Fletcher said that from $418,240 in CHCC’s receivables balance in October 2011, CHCC’s unpaid bills rose to $14,686,022 in January 2015.

Fletcher said CUC’s forecast total revenue for fiscal year 2015 is $88.5 million, including CHCC’s unpaid balance of $14.7 million. This brings CUC’s net revenue to $73.8 million, he said.

To offset CHC revenue loss, Fletcher said that CUC needs a rate increase of 19.9 percent from its remaining customers—both residential and commercial.

“Like all businesses, CUC depends on receipt of cash payments from customers to fund payroll, operating expenses, and capital repairs,” he said.

Fletcher said that with the required 19.9-percent rate increase, this means the increase in average monthly charge required to offset CHC’s non-payment is $33.44 for residential customers consuming 350 kilowatts an hour and 10,000 water/wastewater, and $215.49 for commercial customers consuming 2,000 kilowatts an hour and 20,000 water/wastewater.

In her testimony why CHCC failed to pay CUC $1.3 million for the last three months of 2014 in violation of a court order, Muña said they didn’t have the money since they paid their private vendors first.

Muña said they wrote the Office of the Management and Budget in January 2015 to give them a $400,000 advance on their allotments in order to be able to pay the utility bills. The request was not approved, she said.

Muña said they had to prioritize payments to private vendors because nonpayment was one of the things identified in the citations from the Centers for Medicare and Medicaid.

Muña said she communicated with Gov. Eloy S. Inos and the Department of Finance to get funding to make payments to CUC. She said they’re asking for funding assistance and not free funding from the government.

“We’re saying we cannot afford to pay everybody,” Muña said. “I cannot pay for something we don’t have.”