CUC board OKs surcharge

The Commonwealth Utilities Corp. board of directors approved yesterday a proposal to impose a fuel surcharge that would increase the current electric rate by about 30 percent.

With this, CUC will begin a campaign to inform and solicit comments from customers about the fuel surcharge.

If things go according to CUC’s timetable, the utility firm would start implementing the additional 3.5 cents per kilowatt-hour by Dec. 7. The surcharge implementation, seen as a solution to CUC’s financial crisis, will bring the price of electricity to 14.5 cents per kwh for residential customers and 19.5 cents per kwh for commercial customers.

In a special board meeting, four members of the CUC board of directors voted in favor of adopting the proposed amendments to electric service regulations for a fuel surcharge. They are CUC chair Francisco Q. Guerrero, vice chair Herman P. Sablan, secretary Rufina Miles, and treasurer Allen Perez.

While she expressed support for the imposition of the fuel surcharge, board member Velma Ann Palacios voted “no” to the motion to adopt the proposed surcharge. She said she needed more information about how the adjustment will be implemented, among other things.

For his part, board member Joe Torres was firm about his “no” vote. He said he could not support the implementation of the surcharge knowing that CUC has yet to collect debts in the millions of dollars from the CNMI government.

Chairman Guerrero, however, clarified that the board’s move was not to implement the fuel surcharge, but only to give the CUC management the authority to begin with the educational campaign.

He said the fate of the proposal would depend on the public’s comments.

During the discussion that preceded the vote, CUC vice chair Sablan stressed that all efforts must be exhausted in the planned informational campaign.

“This is not a popular move and we want the people to understand that CUC will collapse if we don’t do this. [Personally], I’d rather pay something and continue to have power supply to my home, than risk it and then not have power,” Sablan said.

CUC legal counsel Kay Delafield said public hearings regarding the fuel surcharge are scheduled to be held on Rota on Nov. 5; on Tinian on Nov. 8; and on Saipan on Nov. 9.

Torres said he agreed with Sablan that the fuel surcharge would ease CUC’s current financial situation but he maintained that CUC must continue to focus efforts on addressing accounts receivable from the government.

“I cannot pass up [the fuel price hikes] to the public… if the government wouldn’t assist [and do its part],” Torres said.

Palacios said many things remain unanswered about the proposed fuel surcharge. She cited for instance a projection made by the CUC management that the utility firm would face a $1.5 million shortfall in fiscal year 2005, even with the implementation of a fuel surcharge of 3.5 cents per kwh.

CUC comptroller Sohale Samari said the shortfall projection was made on the assumption that no further adjustments will be made in 2005. He said CUC has the option of adding another cent or two to the fuel surcharge, if fuel prices continue to go up.