Hotels seek special power rates

The Hotel Association is negotiating with Commonwealth Utilities Corporation for a special power rate to facilitate the eventual hook up of hotels to the island’s electricity system.

HANMI Vice President Mustafa Issa said giving hotels a bulk user rate of about 11 cents per kilowatt hour would make the issue of a mandated hook up more acceptable for the establishments.

Hotels have been at loggerheads with CUC officials on the issue of a power link up owing to the “high rate CUC charges.”

Currently, CUC charges commercial users power at 16 cents per KWH, regardless of consumption level. Residential rates are at 11 cents per KWH.

HANMI has historically resisted CUC moves to require mandatory hook up since it costs most hotels only around 11 cents per KWH or lower to produce their power in-house.

“We are opposed to CUC coming in and requiring our member hotels to hook up 100 percent. But we see a compromise in a bulk user rate of 11 cents per KWH,” said Mr. Issa, who is the general manager of the Hyatt Regency Saipan.

Under the bulk user rate arrangement, big power customers will pay a guaranteed power bill based on a pre-determined minimum power usage level, regardless of whether actual consumption reached that level or not.

In return, the companies will be charged a special lower rate.

The group is asking that the bulk user rate be three-tiered, based on the category and size of the hotel, and the number of rooms.

HANMI wants to get the rate plan going in anticipation of moves by government to again require all hotels to hook up to the public system when a new power plant for Saipan is built.

CUC had been negotiating with Texas-based Enron for the construction of a 60 or 80 megawatt power plant to supplement the island’s power needs. Enron, however, was reported last week as having pulled out, putting the project in limbo.

A good number of hotels especially on Saipan have their own generators, after they were required early into their operations to produce their own electricity, owing to CUC’s inability then to provide sufficient power to the island.

Mr. Issa believes forcing hotels to hook up with CUC will put to waste hundreds of thousands of dollars they invested in building their own power systems.

Besides, he said, it remains doubtful that CUC can deliver the power hotels need “worry-free.”

“What happens when CUC’s power plant fails, or if there’s a typhoon? How are we getting the power our hotels need during such times?” Mr. Issa asked.

“There should be some sort of liability on the part of CUC should it fail to keep its end of the bargain. As you know, power failures could have a tremendous impact on any hotel’s operations and equipment. It could lead to huge losses,” said Mr. Issa.

Representatives from CUC and HANMI have been meeting these past few weeks to find a mutually acceptable solution to disagreements on the power rates and hookup issues.

Lately, House Speaker Benigno R. Fitial has taken interest in the negotiations and offered to broker an expedited agreement. He is said to be looking at how the Legislature could be of help.