‘CUC can’t have financial reserves, nor recover costs’

Conditions currently do not allow the Commonwealth Utilities Corp. to have financial reserves nor recover its costs due to the lack of a functioning Commonwealth Public Utilities Commission, according to top CUC officials.

CUC executive director Gary P. Camacho and CUC deputy executive director William B. Gilmore said that two persons who have been nominated by Gov. Ralph DLG. Torres to CPUC; one has withdrawn their nomination.

“Hence, there is no quorum,” said Camacho and Gilmore in their report pertaining to stipulated order No. 1. The report was filed last week in the U.S. District Court for the NMI.

SO1 focuses on drinking water and wastewater and the restructuring of CUC’s organization.

Camacho and Gilmore stated that adopting the policy to capture and retain financial reserves will require CPUC to authorize that since the present policy of CPUC is that CUC is self-regulated, self-funded and a non-profit entity.

That means any excess revenue generated by the CUC is to be returned by a reduction in rates or some other means.

“There are sound reasons for the creation of financial reserves that can benefit not only CUC but offers an avenue to reduce the need to modify rates over time,” they said.

Camacho and Gilmore said their chief financial officer has been tasked for some time with preparing a multi-year financial plan; however, he has not submitted one as yet.

In February 2017, U.S. Environmental Protection Agency project coordinator John Tinger underscored the need for CUC to develop financial reserves so it could fund and implement the drinking water and wastewater master plan.

Tinger said the financial reserves are needed for emergency operations and maintenance.

“CUC must establish a rate structure to generate sufficient revenues,” he said in his declaration in federal court.

Tinger pointed out that SO1 requires CUC to have an interim financial plan and a final financial plan that will generate enough revenue to cover compliance activities, the stipulated orders, and measures necessary to ensure compliance with the Clean Water Act and Safe Drinking Water Act.

He said SO1 also requires CUC to have a drinking water and wastewater master plan approved by the U.S. Environmental Protection Agency to determine current and future infrastructure needs for a 20-year period, and to provide a long-term plan for CUC’s drinking water and wastewater system improvements.