Transition team places CUC under the lens

The incoming administration of Gov.-elect Benigno Fitial will look into the Commonwealth Utilities Corp.’s financial status amid the continuing power crisis.

Joe Torres, the incoming administration’s transition committee chairman for the CUC, said his team is in the process of looking into the financial condition of the beleaguered utility firm, which was placed under Gov. Juan N. Babauta’s control for about seven months through an emergency declaration.

“I expected that CUC would be in a better position when [the Babauta administration] turned it over to the [CUC] board,” said Torres, who is also a member of utility firm’s board of directors. “Things are just getting worse.”

Babauta’s emergency declaration, which began on May 19, stripped the CUC board of control over the utility firm. Babauta extended the declaration for several months before deciding to lift it effective Friday last week.

“We really have to know how much money the CUC has,” Torres said. “[We have] to check [on] the CUC bank book.”

Torres, however, refused to comment on any recommendation his committee would recommend to solve the CNMI’s power crisis. He did not confirm if the options would include an emergency declaration placing CUC again under the control of the incoming governor.

“We’re still in the process of doing some findings. We’re putting up recommendations,” Torres said.

When Babauta announced the lifting of the emergency declaration last week, CUC board chairman Frank Guerrero said the incoming administration should think about placing the utility firm under an emergency declaration or look for other ways to subsidize power generation, or the CNMI faces power load shedding and rate adjustments.

Guerrero said the CNMI government has infused a total of $13.5 million to the CUC to alleviate the power situation during the seven months when the utility firm was under the control of the governor through the emergency declaration. Of that amount, approximately $7 million went to maintenance of power plant engines, while the rest went to fuel cost subsidies.

With the average monthly fuel cost hovering around $6.2 million, Guerrero said the central government needs to subsidize fuel cost by close to $2 million monthly. He said the average monthly collection from customers has reached only over $4 million. He said the fuel surcharge has also alleviated the CUC’s financial condition, generating some $1.4 million monthly.

According to Guerrero, the CUC’s rate structure, which has remained at the same level since 1989, should be studied. The CUC pegs residential and commercial rates at 11 cents and 16 cents, respectively, for every kilowatt-hour consumed. On Guam and in Palau, residential rates reach 21 cents and 22 cents, respectively, he said.