Gov’t faces power shutoff • Under pressure to raise funds, CUC says multi-million dollar unpaid bills no longer acceptable

Electricity in several government offices may have to be shut off by next month if the Tenorio administration continues to ignore demand for payment of its mounting utility debt which at present amounts to over $12.2 million.

Amid its precarious financial shape, the board of the Commonwealth Utilities Corporation took steps yesterday to squeeze the government after its earlier efforts failed to produce an agreement with the Department of Finance.

As a last-ditch attempt for a settlement, the government-owned utility corporation, however, agreed to provide a grace period to pursue final negotiations until the second week of October.

Board Vice Chair Laura I. Manglona proposed the disconnection of utility services to non-essential departments or agencies at yesterday’s meeting, saying the CUC policy must be equally implemented among delinquent customers.

“If we continue not to disconnect the government, it’s not fair for us to demand payment from residents [or else face disconnection],” she told the board.

Board Chair Jesus T. Guerrero said the debt could double in one year’s time which could further hamper efforts by the utility corporation to improve and expand its services.

“Residential and small business customers are basically underwriting the government’s utility service and this is just not acceptable for much longer,” he wrote in a letter to Finance Sec. Lucy DLG. Nielsen.
“Nonpayment is also wreaking havoc on the CNMI government’s credit rating.”

Renewing his plea for a negotiation to step up payment, Mr. Guerrero warned CUC will review options, including disconnection to government offices, “except those that are critical to health and safety considerations.”

Public pressure

Other directors backed the move, noting the criticisms leveled against CUC over the unpaid government obligation when it normally cuts off power when any of its residential or commercial customers gets behind payment.

Although they made such threat in the past, it is now just a matter of scheduling the disconnection as others felt they need to give one more chance to the government in view of the start of the new fiscal year on Oct. 1.

The operations committee chaired by Ms. Manglona is expected to meet by the second week of next month with finance officials in order to reach a settlement. It also has to identify which public offices to disconnect without disrupting essential services.

CUC previously has sought payment of at least half of the outstanding balance before agreeing to payment of $250,000 per quarter earlier proposed by Ms. Nielsen.

While Gov. Pedro P. Tenorio has repeatedly promised to meet the obligation, his administration has not committed to a dollar amount because of the continuous financial difficulties confronting the CNMI.

The government debt, which has climbed since late 1997, has been a major problem plaguing CUC for the past few months, especially in light of its dwindling revenues.

Fuel hikes

At yesterday’s meeting, Ed Williams, its acting comptroller, warned the board of rising operating costs due to the hike in fuel prices.

Based on the financial report for the first nine months of FY 2000, CUC realized revenues of $48.8 million as opposed to expenditures of nearly $47 million. The close gap was attributed to drastic increase in fuel costs which represented 42 percent of the total expenditures.

According to Mr. Williams, the corporation anticipates difficulties in meeting the operational costs if it does not collect payment from the government. “We need to have concrete payment schedule,” he told the board.

The total outstanding balance is broken down to $1.5 million current billing, $800,000 past due and $9.9 million delinquent account, the report showed.

DOF remitted close to $900,000 in its latest payment last month. The government runs up at least a million dollar a month in power, water and sewer services.

“We need to get more than what we are getting right now… We have been criticized left and right by other customers,” Ms. Manglona said in an interview after the board meeting.

Last April, former Gov. Froilan C. Tenorio prodded CUC to cut off power to the government to comply with its disconnection policy, cautioning the board that failure to do so could invite class-action suit from other customers.

In response to the public pressure, the present administration has implemented conservation measures to reduce energy costs, while the Legislature has proposed distribution of utility payments to each office to ensure that it monitors its power consumption.