Oil price hike cuts CUC revenues

Oil price increases in the world market have taken its toll on the Commonwealth Utilities Corporation as its revenues plummeted by a half-a-million dollars from the period between October 1, 1999 and February 29, 2000 compared to the same five-month period a year ago.

Fuel costs by the utility corporation have shot up 47 percent over the past five months or an equivalent of more than $3 million which CUC has lost since there has been no corresponding hike in power rates.

Between October 1998 to February 1999, CUC earned more than $1.9 million from its utility services, according to its comptroller Yenny Tom.

Utility officials did not indicate what will be the impact of these losses on the corporation’s financial condition, but CUC is currently negotiating with the government to collect over $11 million in unpaid utility bills incurred by public offices.

The board, during its meeting last Thursday, approved a payment plan in which CUC hopes to receive at least $1.5 million each month from the Department of Finance to partly settle the debt. The Tenorio administration still has to accept the proposal before committing any payment.

While market indicators point to possible reduction in oil prices, it is not certain whether CUC’s fuel costs would go down immediately as its fuel supplies have been ordered months ago at prevailing prices at that time.

Meanwhile, Executive Director Timothy P. Villagomez warned the board against a legislative proposal to cut the residential reconnection fee from $75 to $25.

CUC slashed the rate by half years ago from $150 original fee, but the $75 is not even sufficient to pay for the services associated with reconnecting power to homes that have been cut off from the island system due to failure to settle their bills.

If it further lowers the fee, Mr. Villagomez said it would send a wrong signal to all other customers who diligently pay their bills on time.

“CUC does not make money from poor people. We simply encourage customers to pay their bills on time so we can stick to a budget and pay our bills, circulating money through the community,” he said.

Based on its records, the utility corporation disconnected services to only 190 customers, out of the 12,348 it has on the three islands. About 10 customers cut off from the island power are within the low-income bracket, while 33 accounts are commercial.

“Each, we disconnect fewer and fewer customers because our counseling works, the reconnection fee encourages payment,” explained Mr. Villagomez. “It’s a winning combination.”

Since lawmakers have only requested the lower fee which is not binding to CUC’s policies, he said it would not be a wise business decision to pursue this action.

“I cannot, in good faith to our good customers or in good business management, recommend that the board further consider this action,” added the utility chief.