Surcharge proposal awakens people to utility issues

The Commonwealth Utilities Corp. failed to implement the proposed fuel surcharge, but it at least managed to spur an exchange of ideas on ways to solve the CNMI’s utility-related problems.

The CUC management started reviving the fuel surcharge proposal in March, but the CUC board of directors did not start discussing it thoroughly until the middle the year.

On Aug. 10, CUC comptroller Sohale Samari reported that the utility firm was fast running out of cash due to the series of fuel price increases and the government’s non-payment of bills. At the time, CUC claimed that the CNMI government owed the corporation $17.9 million for power consumption—a debt that the administration is contesting in court.

The CUC management said the only way the corporation could continue providing services was to pass the rising cost of fuel onto the customers, in the form of a fuel surcharge amounting 3.5 cents per kwh.

After almost two months of discussion, the CUC board approved the plan with a 4-2 vote on Oct. 20.

Based on CUC’s timetable, the fuel surcharge was to be implemented by Dec. 7, by which time CUC was supposed to have completed the publication of the draft regulations in the Commonwealth Register and the required 30-day public comment period.

On Nov. 26, the CUC board approved the fuel surcharge regulations with some modifications. The board’s decision would have increased the government rate from 16 cents per kwh to 19.5 kwh, the commercial rate from 16 cents per kwh to 17.5 cents per kwh, and the residential rate from 11 cents per kwh to 12.5 cents per kwh, starting December 2004.

The Attorney General’s Office however intervened, saying that the approved regulation was unlawful because it was too different from the proposed regulation earlier presented to the public and because it discriminated against one class of customers, among other reasons.

Left with no choice but to reconsider the proposal, the CUC board made another vote on Nov. 30. The original plan to implement an across-the-board fuel surcharge of 3.5-cents per kwh failed to receive enough votes, with three voting in favor of the plan and three voting against it.

CUC vice chairman Herman P. Sablan, who had been supportive of the fuel surcharge, was not present to cast his vote.

As a result, the fuel surcharge regulation was nullified and not implemented as scheduled.

But while CUC failed to convince consumers to support the fuel surcharge during the public hearings, the firm nevertheless succeeded in opening the public’s eye to the many problems besetting the utility firm.

The outcome was a stream of ideas from various sectors to solve CUC’s systemic problems.

Among the suggestions were for CUC to ensure all consumers are metered; convert its power plant back to utilizing the less expensive No. 2 bunker oil; and pursue the privatization of the two power plants.