CUC explains self on surcharge

Beginning with the March bills sent to customers, the Commonwealth Utilities Corp. will add a fuel surcharge fee to all customers’ electric bills.

“CUC has been forced by higher fuel prices to pass this additional cost along to its customers. With all customers sharing the burden of higher fuel prices, the impact on each customer is kept to a minimum,” said CUC Executive director Lorraine A. Babauta.

The fuel surcharge fee became effective with the publication of the fuel surcharge fee regulation in the February Commonwealth Register. CUC first published the fuel surcharge fee regulation in October 2004. After hearings, receiving comments from the public and working out problems with the regulation, as identified by the Office of the Attorney General, CUC’s regulation was finally published on Feb. 17 in the Commonwealth Register.

The regulation allows CUC to charge up to 3.5 cents as a fuel surcharge fee for calendar year 2005. However, the CUC board of directors has set the initial level of the fuel surcharge fee at 1.5 cents for all classes of customers, as allowed under the regulation.

“It is important for the public to understand right now that this fuel surcharge, being implemented at 1.5 cents per kilowatt hour, will not solve CUC’s critical and immediate financial problems,” stated CUC comptroller Sohale Samari. “CUC anticipate a shortfall of $10 [million] even with the 1.5 cents fuel surcharge fee but expects the shortfall to drop to $5 [million] if the board approves increasing the fuel surcharge fee gradually to 2.5 cents and 3.5 cents in the next four months.”

In calendar year 2004, when the fuel surcharge was proposed but not passed, CUC spent in excess of $10 million over its budgeted fuel cost to pay for fuel. This unanticipated expenditure forced CUC to use all its cash reserves—revenues that were intended for maintenance, repair and replacement of CUC equipment and supplies.

CUC estimates that the initial implementation of the fuel surcharge at 1.5 cents per kilowatt hour will increase revenue at approximately $500,000 per month.

The 1.5 cents surcharge fee represents approximately a 13.6 percent increase in the customer’s electric bill. For example, a family that had been paying $100 a month for electricity would be billed an additional $13.60 per month for electricity as a result of the fuel surcharge fee. For the customers’ convenience, CUC will state the fuel surcharge fee as a separate item on customer’s bill. (PR)