CUC to submit rate case applications to CPUC soon

The Commonwealth Utilities Corp. is in the process of finalizing its rate case applications, which will be submitted before the Commonwealth Public Utilities Commission.

In a board meeting last Saturday, the CUC board discussed with their consultants, Economists.com, their rate case applications.

A new docket, Docket 16-01, for the power side is being finalized.

The rate adjustment proposal will include two surcharges: the Disaster Recovery surcharge, which will be $0.0145 per kilowatt hour; and the Capital Improvement surcharge of $0.0225 per kilowatt hour.

The Disaster Recovery surcharge, which is designed to recover CUC’s 10 percent share in typhoon damages, will be implemented across all ratepayers.

The Capital Improvement surcharge, on the other hand, will be only be applied to commercial and government accounts. This will help CUC recover its capital improvement projects at $2.6 million a year. This would mean a total of $0.037 per kilowatt hour surcharge for the said accounts.

Both surcharges are set to expire a year after the implementation.

The consultants added that additional rate adjustments will be required if a law compelling businesses on public properties to connect to the grid fails to pass, if the bill requiring CUC ratepayers to pay for street lighting costs becomes law, if usage fails below forecast, if maintenance or capital improvements on aging system higher than anticipated, or if uncollectible are higher than expected.

These surcharges come after the majority of the board approved their addition to their rate application.

In earlier discussions, Economists.com told the board that it has the unique opportunity to “invest” some of its “savings” because of the low cost of fuel, meaning they could adjust rates but their ratepayers would still pay lower than what they paid two years ago.

Basing on a uniformed rate, they recommended adding across the board $0.008 per kWh for the $1.5 million needed for CUC to recover from the settlement agreement with the Commonwealth Healthcare Corp. and increase in bad debts; $0.007 per kWh for CUC’s $1.2 million debt payment to the CDA; $0.015 per kWh to pay for the $3 million share of CUC for typhoon restoration; and $0.027 per kWh to have $5,219,265 for non grant-funded capital project requirement.

This would total $10.9 million in revenues for CUC to improve its quality of service, financial health, and pay costs CUC has incurred since last year.

However, the board decided to adopt only two surcharges with restrictions on amounts and which accounts will be affected.

Clarification
“Rates are a decision made by board. They reflect the policy decision the board makes,” Economists.com managing director and chief executive Dan Jackson said in an interview.

In February last year, Jackson reported in a joint hearing of the 19th Legislature’s Public Utilities, Transportation and Communication Committees that CUC incurred about $80 million in operating losses since 2006 and that the utility agency might have one year left if it continues to struggle financially.

Asked if the surcharges will be enough for CUC to recover and maintain its operations since there were warnings of the company running out of money in October, Jackson said, “It would certainly help, but CUC does have a lot of financial challenges and this is a very positive step forward for CUC.”

During the meeting, board vice chair Eric San Nicolas took the opportunity to “clarify” certain “popular belief” about the CUC board.

San Nicolas said that he hopes that the reporting of the rate adjustments will “give the impression that we are doing our job and that we’re not, contrary to blog or popular belief, that we don’t know what we are doing. It is evident in the rates that we are addressing by line item that we are taking business very, very seriously contrary to one particular director’s opinion.”

Eliminate water/waste water electric charge
For water and waste water, CUC will be amending Docket 15-03 which they submitted to the CPUC last April which will eliminate the water and waste water electric charge on their customers’ bill and instead include an electric surcharge to the power side.

Jackson said the customers’ electric charge will go up but their water charge will decrease significantly because of this adjustment.

According to legal counsel James Sirok, they would just amend last year’s application to state that the surcharge will be $0.013 per kilowatt hour instead of the earlier determined $0.019 per kWh.

“We’re putting [the applications] together now. We’re developing and we’re filing at the end of this week coming or the following week,” Sirok said.