Surcharge repeal unlikely— Babauta

Gov. Juan N. Babauta “is leaning toward not signing” the bill that aims to scrap the law that allows the Commonwealth Utilities Corp. to impose a fuel surcharge fee.

Citing a list of reasons, the governor said “the CUC fuel surcharge cannot be eliminated,” at least for now.

He said the surcharge fee is necessary in the wake of the huge jump in oil prices.

Over a year ago, he said that CUC was paying $30 million a year to buy fuel but due to increases in oil prices, CUC now will spend $60 million for this this year.

“This 100 percent [increase] is about the same [amount] consumers are paying to fill up their car’s gas tank since a year and a half ago,” he said.

Unlike Mobil and Shell, he said CUC cannot raise or lower prices a little at a time to avoid a public outcry. CUC, he said, has to go through its board of directors.

Unfortunately, he said, “the board did not take the actions necessary in a timely manner to compensate for the rising fuel costs, so the fuel surcharge hit the public hard all at once. …I know that it hurts people, and I wish I have some control over the price of oil, but I don’t.”

For now, he said, the fuel surcharge is necessary “if we want to keep the lights on in the Commonwealth.”

Some people, he said, are using the argument that if the government goes back to subsidizing CUC, the problem would go away.

“Let’s examine that. Last year, the government was paying a flat rate of $11 million a year without being metered for consumption. During the boom years of the 1990s we could afford this subsidy. Today we cannot,” he said.

Yet, even if the government pays CUC $11 million, the utility firm would still be short by $10 million for its annual fuel costs.

“So government subsidies are not the answer,” he said.

The existing 3.5 cents fuel surcharge per kilowatt hour would net CUC some $14 million, which, he said, is still not enough to cover the increase in fuel costs. The governor said the utility firm would still be $16 million short.

Moving to La Fiesta would save CUC some $3 million a year, yet it is not enough to solve the financial dilemma.

Press secretary Pete A. Callaghan said that the governor has not acted on House Bill 14-343.

“There’s no action yet but if you follow the reasons cited, it’s pretty safe to say that he’s leaning toward vetoing the bill,” said Callaghan.

The House of Representatives and the Senate earlier passed the bill, which repeals 4 CMC section8148 (b) to get rid of the fuel surcharge provision.

The existing law currently allows the CUC board to impose a fuel surcharge of up to 3.5 cents per kilowatt hour.

The House unanimously voted on the bill, which was authored by Vice Speaker Timothy P. Villagomez, a former executive director of CUC.