1.5 cents surcharge OK’d

In yet another turnaround, the Commonwealth Utilities Corp. board of directors approved yesterday a fuel surcharge fee of 1.5 cents across the board.

CUC’s move now brings the fate of the fuel surcharge up to Gov. Juan N. Babauta, without whose signature the rate adjustment cannot be implemented.

Adopted on an emergency basis, the regulations—which were passed on a 5-23 vote—will take effect for a period of 120 days immediately upon filing with the Commonwealth registrar and concurrence by the governor. Then, CUC has the option to adopt the regulations on a permanent basis by undergoing the normal adoption process, which includes a 30-day public comment period.

Similar to the set of regulations proposed last year, the adopted rules set a ceiling of 3.5 cents per kwh during the first year of implementation of the fuel surcharge fee.

However, in a separate resolution it adopted yesterday, the CUC board prohibited the comptroller from implementing a surcharge fee higher than 1.5 cents or including past unrecovered excess fuel costs in the surcharge computation without the board’s consent.

Any future changes to the fuel surcharge policy should be made in a formal board resolution, the board said.

Further, the adopted regulations allow for discounts or reductions in the rates below the annual surcharge ceiling, provided that the adjustments are provided to all customers equally.

CUC may only implement discounts or reductions on a customer class basis on two conditions: (1) the rate structure should be supported by documentation of economic or financial distinctions showing that each rate is just and reasonable, and (2) the structure should not unduly discriminate.

This provision in the regulations resolves an earlier problem CUC encountered when it voted to implement a surcharge of 3.5 cents per kwh for the government, and 1.5 cents for businesses and households.

In a draft public notice, which will be published in the Commonwealth Register upon the governor’s approval, CUC listed reasons why the regulations should be adopted on an emergency basis.

“CUC’s fuel expense has risen by 128 percent over the past five years. Cost of production of electricity currently exceeds revenue generated from the sale of electricity to customers. CUC has been forced to exhaust all its cash reserves to meet fuel expenses. In the last six months of 2004, CUC spent over $7 million of its cash reserves to pay for fuel. These reserves are now exhausted,” CUC said.

The utility firm also reported that it will be unable to pay for fuel beginning February 2005.

CUC comptroller Sohale Samari said in an interview that CUC has maxed out its $10-million credit with Mobil. The oil supplier, he added, is now asking CUC to pay $2 million upfront when Mobil makes a delivery before the end of this month.

Those who voted in favor of the fuel surcharge were CUC chair Frank Guerrero, vice chair Herman Sablan, secretary Rufina Miles, and treasurer Allen Perez. Voting against the surcharge were board members Velma Ann Palacios and Joe Torres.