CUC records: CNMI gov’t unpaid utility billings reached $66.37M

Rep. Vincent S. Aldan (Ind-Saipan), fourth from left, who chairs the House of Representatives Public Utilities, Transportation, and Communications Committee, talks about their findings on the Commonwealth Utilities Corp. Fuel Adjustment Charge during a press conference in the House chamber Tuesday afternoon. Also in the photo are members of the PUTC committee. (FERDIE DE LA TORRE)

As of March 31, 2023, the CNMI government’s unpaid utility billing has reached a staggering $66.37 million, including the Commonwealth Healthcare Corp.’s $53.58 million, based CUC records, according to Rep. Vincent S. Aldan (Ind-Saipan).

This is on top of what commercial and residential customers owe CUC. In all, the total outstanding collection owed CUC is over $88 million.

“That one agency is jeopardizing everything else to the tune of $53 million. This is without penalty,” said Aldan, referring to what CHCC owes CUC.

Aldan, who chairs the House of Representatives Public Utilities, Transportation, and Communications Committee, disclosed the CNMI government’s huge unpaid utility billings in a news briefing in the House chamber Tuesday afternoon about their findings on CUC’s Fuel Adjustment Charge.

Based on CUC records that Aldan shared with the media, CUC has $2.28 million in accounts receivable from the Commonwealth Ports Authority; $53.68 million with disputed accounts receivable from CHCC; $8.97 million with disputed receivable from the central government; and $1.42 million with disputed receivables from other government agencies.

Aldan said they called for the news briefing to share what the PUTC discovered in their investigation on CUC. He noted that CUC’s FAC rate is a pressing issue that concerns everyone. “We all know how hard it can be to pay these bills. And it’s a problem that affects us all,” he said, adding that the FAC rate is a problem that needs urgent attention.

The FAC rate is the cost that CUC pays its fuel supplier for fuel used to generate electricity and other operation and maintenance costs.

Aldan said the PUTC has sought feedback on solutions to the high cost of utilities and they believe the priorities of the Legislature should include restructuring CUC, in coordination with the administration and government agencies, and collaborating with stakeholders to develop affordable utility rates for all CNMI rate payers.

“People must understand why is your FAC rate so high? A lot of it has to do with the collection that CUC still trying to collect,” he said.

Interference

Aldan cited a four-page summary of an Office of the Public Auditor’s Report for 2017, which states that a review of CUC’s financial audit reports showed that the CNMI had a balance of about $6.4 million in unpaid utility billings, representing 19% of the $34.4 million due from all customers in fiscal year 2010.

OPA found that the CNMI government’s unpaid utility balance rose to $21.9 million, or 53%, of the total $41.6 million due from all customers in fiscal year 2014.

The OPA report disclosed that CUC has not achieved its purpose to operate as an independent public agency, with the independence to perform as a non-subsidized, autonomous corporation due to interferences by the Legislature, various governors, and the boards of directors throughout its history.

In its conclusion and recommendations, OPA stated that almost 30 years of history has shown that CUC in its current form is barely sustainable and is obviously inefficient.

OPA said what they have witnessed is a series of failures, which have ultimately required government bailouts affecting the general fund, Marianas Public Lands Trust, and the Commonwealth Development Authority (now Commonwealth Economic Development Authority), to provide for emergency generation and other operations.

OPA said these bailouts enabled CUC to continue, but at a major financial cost and disruption of services.

OPA found that CUC consistently operates as an unsustainable public entity, unable to recover its cost of operations and struggling to retain qualified executive officers.

OPA said CUC has experienced numerous emergency declarations and executive orders by the Executive Branch and endured repeated modifications of laws that continually fail to address long-term solutions.

To continue to assume that a politically appointed board of directors—whose members are required to have minimal qualifications and who are subject to the orders and influence of the Legislature and the governor—will lead the corporation to success and sustainability is to ignore the realities of CUC’s financial condition and operations, OPA said.

OPA said history has clearly shown that a politically appointed board is unable or unwilling to exercise the necessary fiduciary responsibility for CUC to succeed.

Possible solutions?

Aldan said they will be introducing a legislative initiative to amend the CNMI Constitution to ensure that any autonomous agency has the right and ability to hire their own legal counsel, instead of hiring the Office of the Attorney General.

“It’s a conflict of interest when you have one government agency and another government agency represented by the attorney general. Granted that they might say that there’s no conflict of interest, but history has shown otherwise,” Aldan said.

He said they will also be introducing legislation to remove the CUC board.

He said they are going to introduce a legislation where the commissioners of the Public Utilities Commission will be elected positions, just like in Guam or other states in the U.S. mainland.

He said this will minimize or potentially eliminate the interference of the Executive Branch or Legislature in CUC’s operation.

“By having independent commissioners to regulate the utility rate structure, I think you will have a more stable and a stronger utility that will be able to go out and collect what is owed,” Aldan said.

He said the OPA report shows that there have been a lot of political interference since CUC’s inception.

No comment

When asked to comment on the recent termination of acting CUC executive director Dr. Dallas M. Peavey Jr., Aldan declined to do so, saying the issue is an internal matter.

“And right now we’re just looking at the bigger picture,” Aldan said.

Rep. Marissa Renee Flores (Ind-Saipan), who is a member of PUTC Committee, reiterated that the press conference is meant not to talk about the internal issues of the CUC board’s decision, but is about the FAC rates and what is the root reason of that.

“I leave that up to the internal affairs of CUC to handle. I’m not here to comment on the internal affairs of the matter involving Dr. Peavey,” Flores said.

Aldan and Flores were present during the CUC board’s regular meeting last Friday. Both spoke during the meeting’s public comment portion.

CUC board chairwoman pro tem Janice A. Tenorio terminated Peavey’s employment last Monday.