CUC: $6M-$10M savings a year if power grid is fixed

The Commonwealth Utilities Corp. could realize savings of between $6 million and $10 million a year if they brought line losses down to levels comparable to the U.S. mainland—underscoring the need for the CNMI’s struggling public utility to invest directly in some of its $10 million worth of deferred utility repairs and upgrades.

Last Friday, the CUC board voted to withdraw a 2.1-cent kilowatt hour surcharge pending with the Commonwealth Public Utilities Commission. The plan is that this rate, or the “debt relief” surcharge, will be replaced with an “infrastructure improvement” charge, for which an amount or exact name will be finalized in the coming weeks.

Board member Joe Torres, who motioned for this vote, cited CUC’s 20 percent overall line losses—the energy wasted as power is transmitted along the grid.

Yesterday, chief financial officer Matthew Yaquinto confirmed that CUC’s line losses are between 18 to 20 percent, adding that, “normal ranges on the mainland are less than 10 percent and sometimes less than 5 percent.”

He said CUC will probably not be able to get below 5 percent but can get below 10 percent.

“If we get below 10 percent, say to 8 percent, it would be a savings of between $6 [million] to $10 million per year,” he told Saipan Tribune.

CUC executive director Alan Fletcher separately told Saipan Tribune that they have identified $10 million worth of needed repairs and upgrades to improve distribution efficiency and to cut losses in their power system.

Fletcher pointed out that CUC actually began with an infrastructure surcharge before it was changed to a debt service surcharge. The previous rate expired at the end of April. Essentially, CUC was aiming to renew a rate already appearing on customer’s bills.

Fletcher said the purpose of the infrastructure charge would be to accomplish electrical distribution and power related projects that have been deferred over time due to their “liquidity crisis,” or their lack of funds to meet even some short-term obligations.

While system improvements have been identified in past rate cases, Fletcher said that monies have always been diverted to buying fuel or other system priorities to keep the utility running.

“As a result we are sitting on a lot of deferred maintenance,” he said.

“Past analysis has identified $10 million in needed distribution repairs and upgrades to improve efficiency and cut technical losses. Improvements such as changing out transformers to match current loads, basically right-sizing the system to today’s needs,” he said.

“Also, replacing old dilapidated poles, cross-arms, and other hardware that will provide better system reliability during storms and allow speedier recovery,” he said.

“Cutting technical losses would have a payback, helping to better manage fuel costs,” the director said. “However, it takes direct investment to make this happen and a targeted surcharge would restrict these funds to these certain projects.”

He commended the CUC board for this move, but also added that they also have to make sure the utility can continue to operate by ensuring customers pay their bills.

Right now, CUC is still sitting on over $30 million in receivables. “While there appears to be no quick and easy solution to this crisis,” the executive director said, CUC “desperately needs receive regular monthly payments from its large government accounts to stay afloat.”

Fletcher was probably referring to the Commonwealth Healthcare Corp., among others.