Judgment on PSS, CHCC collection lawsuits eyed

The Commonwealth Utilities Corp. had just about had enough of delinquent government accounts and is set to issue an ultimatum to the Commonwealth Healthcare Corp. and the Public School System to pay up or the courts will be asked to decide on the matter.

Saipan Tribune learned that settlement negotiation between PSS and the utilities corporation may be halted following a drop in PSS’ budget for fiscal year 2015, as recommended by the governor in his budget plan submitted to the Legislature.

CUC earlier separately sued its three biggest customers—PSS, CHCC, and the central government—for their outstanding obligations, now totaling over $21 million.

In the letter to be issued anytime this week, CUC will demand a “compromise plan” from PSS and CHCC or any effort of showing “good faith” from them.

“If not responded satisfactory, CUC will go ahead and file a motion for judgment [in court],” said CUC board chair David J. Sablan in his instruction to their legal counsel.

CUC, however, did not include the central government in its plan to issue ultimatum letters.

Sablan disclosed yesterday that “initial discussion” between him and the administration on the central government’s arrears hints at a positive result. He said “relief” is forthcoming to CUC.

“I feel comfortable with the central government arrears because there was already initial discussion. The governor is supportive of CUC and there might be a ‘relief’ on that,” said Sablan, adding that he will continue this negotiation to ensure that CUC will get paid.

CUC chief financial officer Charles Warren said the aging receivables from PSS, CHCC, and the central government now totals over $21 million as of March 31, 2014. The bulk is owed by CHCC, which is $11 million; $6.4 million is owed by PSS and about $3.6 million is owed by the central government.

Warren disclosed that because of CUC’s cash-flow problem, it was forced to de-obligate some funds for certain contracts so it could buy fuel every two weeks.

CUC legal counsel James Sirok described CHCC “as the biggest abuser” of the utilities agency. He disclosed that the hospital never responds to letters from CUC. According to Sirok, CHCC is “totally ignoring” the utilities agency.

Despite years of delinquency, CUC has always provided uninterrupted service to the healthcare corporation’s facilities.

CUC board vice chair Diego Songao said that CUC should look into the assets of these delinquent customers to help offset their increasing power bills. CUC could use empty or unutilized school buildings and offices to generate revenues.

Sablan also opened up the idea of disconnecting non-essential services under the two agencies to at least minimize the debt they are incurring with CUC.

He said all customers of CUC must be treated equally and fairly, and if there’s a need to invest in separate meters for these non-essential services, the board is willing to go that route.