Panel: CUC fiscal health needs full audit

The incoming administration’s transition committee said the Commonwealth Utilities Corp.’s financial situation needs full auditing that will run even after Gov.-elect Benigno Fitial and Lt. Gov.-elect Timothy Villagomez assume their posts on Jan. 9.

Joe Torres, who chairs the committee for the CUC, said that the group is still in the process of completing its report due to the intricacies of CUC’s problems.

Earlier, Torres chided the Babauta administration, noting that CUC continues to be in financial distress despite the incumbent governor’s emergency declaration that placed the utility firm under his control for about seven months. Babauta only lifted the declaration last December.

Torres said he has requested the administration to provide him a copy of its reports related to the emergency declaration.

“We need a complete auditing of the whole situation,” Torres said. “I believe that everything can be fixed if managed properly.”

While most of the transition committee reports for other government agencies have been completed, Torres said his committee needs extra time to finish the work. “It’s just a lot of stuff that we’re putting together.”

Regarding the CNMI’s power situation, Torres said his committee would come up with recommendations on how the incoming administration should deal with the problem.

He said the committee is also studying the possibility of a rate increase. He refused to elaborate on this and other options pending the completion of the committee’s report.

The CUC pegs residential and commercial rates at 11 cents and 16 cents, respectively, for every kilowatt-hour consumed. In Guam and Palau, residential rates reach 21 cents and 22 cents per kwh, respectively, according to CUC chair Frank Guerrero, who said the CNMI rates have been in effect since 1989.

Guerrero earlier said the incoming administration should think about placing the utility firm under an emergency declaration or look for other ways to subsidize power generation, or the CNMI faces power load shedding and rate adjustments.
Torres, who also sits as CUC board member, did not comment when pressed if the committee would recommend the continuation of government subsidy to the beleaguered utility firm.
The government has infused approximately $15 million to the CUC under Babauta’s emergency declaration—more than half of which went to fuel cost subsidy. CUC’s power generation for Saipan, Tinian and Rota costs approximately $179,000 daily, while CUC’s average monthly collections hover around $6 million.