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CUC refuses to return $800K to customers despite canceled loan
Saipan lawmakers insist on reimbursement
Commonwealth Utilities Corp. officials told members of a Saipan and Northern Islands Legislative Delegation panel yesterday that the estimated $800,000 they collected from customers since July 2011 to help repay a $10-million loan won’t be returned and will be used instead for other CUC needs. Lawmakers are insisting that the money be given back to customers since it was collected for repayment of a loan that did not materialize.
Rep. Frank Dela Cruz (R-Saipan), chairman of the delegation’s Public Utilities and Infrastructure Commission, and other panel members took turns asking CUC to return the money.
CUC chief financial officer Charles Warren told the panel that the Public Utilities Commission last year authorized the collection of additional charges from customers and CUC would continue collecting until PUC says they should stop doing so.
Acting CUC executive director Alan Fletcher said it’s no longer about debt servicing anymore but about addressing CUC’s needs to ensure that customers get power, water, and wastewater services.
CUC started billing customers on June 7, 2011, in anticipation of the loan, but actual collection started at a later date.
Warren said that CUC has so far billed $929,000 but actual collection is about $800,000.
Rep. Joe Palacios (R-Saipan) said he understands CUC’s needs but the money was collected from customers specifically for debt service and not for anything else.
Palacios pointed out that CUC recently bought new vehicles despite reporting financial problems.
But Fletcher said CUC had been using old and decrepit vehicles that cost the agency some quarter of a million every year just to maintain and fix so CUC decided to buy new one. He also said CUC cannot use grant money for other things if they’re meant to buy vehicles, for example.
When Dela Cruz asked whether CUC still needs the $10 million loan, Warren said, “Yes.”
The committee chair said that Independence Bank, which has been receiving financial information from CUC up until early this year, noted that CUC has the capability to repay the loan and has been in fact collecting from customers to help repay that loan.
Fletcher said that CUC still needs the loan but CUC’s finances are not strong enough to service that loan. Among other things, CUC has been deferring maintenance on a lot of its equipment.
The $10-million loan was supposed to be guaranteed by the U.S. Department of Agriculture. The money was supposed to be used by CUC to address federal stipulated orders.
Acting governor Eloy S. Inos last week said his understanding was that USDA pulled the plug on the $10 million loan, but Independence Bank said it was the CNMI Office of the Attorney General that did it.
The committee will call for another meeting with CUC. Among other things, they want to know who made the decision to back out of the loan.
CUC is under a state of emergency because of financial, procurement, and hiring crises, among other things. It is now again under the direct control of the Executive Branch.
By Haidee V. Eugenio
Reporter
