CUC puts off decision on fuel surcharge fee

The Commonwealth Utilities Corp. is turning to Gov. Juan N. Babauta to come up with solutions to the firm’s financial problems.

The CUC board of directors, in a 4-2 vote, decided yesterday to defer making a definite decision on the proposed fuel surcharge, pending a meeting between CUC officials and the governor today.

Babauta is expected to suggest solutions to CUC’s financial problems at the meeting.

The board took up the fuel surcharge proposal yesterday, following a projection by the CUC management that the utility firm will face a huge budget shortfall when its fuel payments become due to Mobil next month.

During the board meeting, CUC director Joe Torres said the corporation should look at alternatives to the fuel surcharge. He also rallied the support of his colleagues for his proposal to have the Legislature pass a bill offsetting CUC’s debt to the Commonwealth Development Authority with the $20-million utility bills allegedly owed by the government.

Board members Martin Mendiola and Allen Perez expressed support for Torres’ recommendation.

However, Perez also maintained that CUC should implement a fuel surcharge of at least 1.5 cents per kwh as a short-term solution to the budget shortfall, which is caused by the fuel price increases last year.

CUC expects to collect about $500,000 a month if the 1.5-cent surcharge is implemented.

“We have to do something to immediately generate cash flow. We’ve been asking the government to pay their bills for the past nine months. Realistically, I don’t think they will bail us out with millions of dollars,” Perez said.

Board member Rufina Miles, who was participating in the meeting via telephone, echoed Perez’s statement. “In two months, we might not have the money to pay for fuel. The fuel surcharge is something we need to do right now,” Miles said.

For his part, Torres insisted that the board drop the proposal altogether and pursue other means to generate money for the firm.

In the end, however, the board agreed to hear out the governor before making a final decision. Those who voted in favor of deferring the issue were Torres, Mendiola, Velma Ann Palacios, and acting chair Herman P. Sablan.

Perez and Miles voted no. Board chair Francisco Q. Guerrero was off-island.

Saipan Chamber of Commerce president Alex Sablan, who attended the board meeting, expressed hope that CUC has “a fruitful meeting” with the governor today.

He also said he was pleased by Torres’ recommendation that CUC consider the alternatives still available to the agency.

Sablan stressed that CUC should come up with a plan of action that includes both long-term and short-term solutions to utility-related problems. He reiterated his call for CUC to look at burning a cheaper type of fuel at the power plants.

“I think this community will agree to a fuel surcharge if they are convinced that it is the last resort for CUC, that CUC actually looked at all the ideas on the table before it considered the fuel surcharge as an option. It’s just discouraging that we have to pay more because CUC lacked planning,” Sablan said.