WHAT ELSE IS NEW? CUC reports losses

Tough times are ahead for the Commonwealth Utilities Corp. as it continues to be saddled by rising fuel costs and unpaid government billings that have resulted to the agency operating at a loss this year.

CUC Executive Director Timothy P. Villagomez yesterday warned utility officials of more belt-tightening in the next few months unless the price of fuel goes down and the government pays its debt.

The board of directors was given a grim report on the government-owned corporation’s financial shape at a meeting yesterday, indicating a loss of close to $300,000 for fiscal year ending Sept. 30, 2000.

Revenues collected from power, water and sewer services totaled $65.3 million for FY 2000 but operating expenditures reached $65.6 million, of which $28 million were spent for fuel to run power engines, according to acting comptroller Ed Williams.

CUC is expected to review its rate structure to determine whether its customers are paying the right amount, but Mr. Villagomez was quick to brush aside suggestion of rate hikes in the immediate future.

“It’s premature at this time,” he told reporters after the meeting. “There are procedural things to be followed. It will take a while, six months to a year to come with such action.”

Rate restructuring

Board Director Zania M. Fleming recommended to the board future rate restructuring through an internal review by CUC, but Mr. Villagomez maintained the effort needs to be handled thoroughly.

He is expected to submit a scope of the analysis to the board for approval before forging ahead with the study that he said would look into the present rate to determine “whether or not we are operating at a loss or at a rate that’s not economically sufficient” for the corporation.

“The intent here is to bring the study to the board so that the board can take a final analysis on what to do,” explained the CUC chief. “Maybe our rate is too high and our expenses are too extravagant.”

At present, residential customers are paying 11 cents per kilowatt/hour, while commercial and government establishments are being charged 16 cents. The rates have been in place for the last five years.

Mr. Williams in his report said at the current fuel price level, it will be difficult for CUC to meet its day-to-day operations with the present revenue collections.

The utility collects an average of $5.4 million a month, but fuel costs eat up more than half of the amount or over $3 million. He said fuel price has jumped from 64 cents per gallon in October 1999 to $1.08 this year.

With other expenses such as monthly payroll of $1.2 million , purchase of parts and supplies and maintenance of power engines, CUC is looking at estimated shortfall of $650,00 per month.

Austerity measures

“We need to consider cost-cutting measures,” Mr. Williams told the board. “We need to reduce our travel, reduce overtime pay and defer salary increase for our employees.”

According to Mr. Villagomez, he has informed all the managers of the tight financial situation and to brace for the tough times ahead.

“I have them working to prioritize their needs as we are having difficulty meeting our financial obligations. We are a 24-hour utility and it is difficult to try and balance the needs of each division as we must ensure that services are not interrupted,” he said.

Mr. Williams, on the other hand, underscored the need to step up effort in collecting outstanding account of the government currently amounting to over $12 million.

“It is critical that we keep requesting for minimum payment of its monthly billing and at least $250,000 [to pay back the arrears],” said the comptroller.

Government offices run up charges of between $800,000 to $850,000 every month, and the Department of Finance has paid regularly an average of $1.15 million to CUC for the last few months.

DOF and CUC are still locked in a dispute over the government debt and have yet to come with a payment schedule to settle the financial obligations.

CUC Deputy Director Patrick Leon Guerrero pointed out at the board meeting that they have uncovered $700,000 that have not been paid by the government, which further increased its debt.

Mr. Villagomez said he will discuss the issue with Finance Sec. Lucy DLG. Nielsen to immediately find a middle ground on the problem.