Teno backs CUC • There is no money to subsidize the utilities company, according to governor

Gov. Pedro P. Tenorio said yesterday he would fight plans that would seek to reduce existing power rates for commercial and residential use in fear that such move would further hurt the local coffers by subsidizing the utility company.

The Senate has put forward a legislation seeking to cut by an average of 25 percent the cost of electricity as a way of helping residents and businessmen cope with the worsening economic conditions in the islands, a proposal strongly opposed by the Commonwealth Utilities Corporation.

“I want to make it very specific that I am not supporting the reduction because we have to be very mindful that CUC will have to continue to operate,” the governor said. “We don’t want to see the government subsidizing CUC.”

The local chief executive explained that while he welcomes the proposal as a “good gesture”, authors of the proposal should also weigh its impact on the operational expenses of CUC.

Proponents of the legislation say the measure is designed to address complaints from consumers, revamp the collection system of the utilities firm, reduce fees associated with the reconnection of power service.

Senate Bill 11-115 proposes to lower the rates CUC charges to its residential consumers to 9 cents from 11 cents per kilowatt/hour, while commercial users to 11 cents from 16 cents.

But CUC Chairman Juan S. Dela Cruz explained the proposed reduction would translate to an average of $13 million in annual revenue losses, as he raised fears that such situation would push the utilities firm into deeper financial woes. Recently, the company rolled back the power rate it charges to the government from 20 cents to 16 cents.

According to Dela Cruz, the proposal, now pending in the Committee on Public Utilities , Transportation and Communications, will undermine efforts of CUC to become self-reliant.

While CUC officials contend that the proposed measure would benefit users, it overlooks serious financial implications on the revenue-generating capacity of the firm.

A study by an independent group commissioned by the federal government has recommended higher power rates for island residents, but CUC said it held back implementation.

To offset losses from keeping residential rates at its current level, the agency chose to embark on a wide-ranging cost-cutting steps to bring down expenditures amid increasing fuel prices and growing bad debts.

From 1992 through 1997, CUC has written off $8.4 million in uncollected debts. The government-owned utilities company accumulates $700,000 in unpaid bills from customers annually.