Gov’t owes CUC $6.8M • Utility officials vote to lower rate to 16 cents to help Teno administration cope with obligation

In yet another sign of deepening financial woes of the CNMI, the government has yet to pay the Commonwealth Utilities Corporation some $6.8 million in utility bills accumulated over the last six months.

The public utility firm has been trying to collect the overdue charges by coming up with a payment schedule favorable to the Tenorio administration. The debt is the largest so far incurred by the government to CUC, according to officials.

To help the cash-strapped government, the CUC Board of Directors yesterday voted to lower its power rate from the present 20 cents per kilowatt-hour to 16 cents, which is the same rate offered to commercial users.

The adjustment, however, will only become effective late next month after the board decision has appeared on the Commonwealth register. This would also translate to least $1 million savings each year to the government.

“We are not Santa Claus by reducing the rate,” said director Benjamin Sablan during the board meeting. “Times are hard and we should revert it back to a palatable and fair rate.”

The move, initiated last November and intended to wean CUC away from public subsidy, came immediately after the board expressed worry over failure by the government to settle $6.8 million it owes to the utility corporation.

CUC has sought a meeting with the Department of Finance to try to work out a payment plan to reduce the government obligations and avoid sending the corporation to serious financial difficulties.

Executive Director Timothy P. Villagomez said non-payment of the debt would affect “tremendously” the CUC operations and its ability to pay back its own vendors and contractors.

“I don’t have $6.8 million in my pocket every single month … I need for them to start paying so I can continue to pay my vendors,” he said in an interview after the meeting.

But the CUC chief acknowledged the financial hardships facing the government over the past two years, saying that the lower rate is the first step to ease the administration’s mounting obligations.

The proposed payment plan is another measure to lessen another burden, according to Villagomez. “The government is undergoing difficult times as well so we are doing our best to try to assist (them),” he added.

CUC’s biggest customer, the government spends an average of $8 million each year for its utility costs.

“CUC is always suffering when customers don’t pay the bill. It is just a matter of having the two agencies (CUC and DOF) to get together… to try to come up with a payment schedule.”

Due to the economic slowdown besetting the island as a result of the Asian recession, government revenues have sharply declined since late 1997, making it difficult to meet its various obligations to vendors and other contractors.

At present, the NMI Retirement Fund has outstanding claims of $21 million, which represent unpaid contributions by the government for its nearly 5,000 personnel, although the Tenorio administration has paid at least $1.6 million monthly since May to reduce its debt.