Senate chooses to let PUC set the utility rates for the NMI

The Senate shelved yesterday a bill that would reverse the October 2007 rollback of power rates.

By a unanimous vote, the senators decided that no action be taken on House Bill 16-79 until the Public Utilities Commission is ready to set new rates for the Commonwealth Utilities Corp.

Meantime, the power rate for low-end power users will remain at 17.6 cents per kWh.

The action was taken at the recommendation of the Senate Committee on Public Utilities, Transportation and Communication.

In a report, the committee said it was “simply unacceptable” that PUC, which was created over a year ago, had yet to organize or regulate rates. This failure, according to the panel, has “left the utilities functionally unregulated and the public at the mercy of the utilities.”

House Bill 16-79, as originally approved by the House, proposes to restore the rate structure CUC adopted in 2006 in a bid to cope with oil price increases.

The bill would repeal Public Law 15-94, which forced residential rates down to 17.6 cents per kWh in October 2007, and either reduced or scrapped other charges for residential customers.

The Senate previously passed the bill, albeit with some changes. Under the Senate-amended version, the rollback law would only be suspended for 60 days, instead of being scrapped altogether. The PUC must set new rates within those 60 days. If the regulatory body fails to do so, the rolled-back rates will again come into effect.

But the House rejected the Senate amendments, believing that they were impractical. The lower chamber said the PUC members would need at least six months to get training and begin establishing the rates.

Still, the Senate insists the PUC must act before the Legislature does anything else about the power rates.

The 15th Legislature passed P.L. 15-94 amid pressure from the consumers who were suffering from the sudden hike in power rates.

However, the Legislature’s action hurt the utility’s finances. According to CUC, the rollback, compounded by the rising cost of fuel, has caused the utility to face a monthly shortfall of about $1 million for fuel. For months now, the cash-strapped government has ended up paying millions of dollars in fuel subsidy to CUC.

This occurred even though the 17-cent rate remained in effect for one month only. In November 2007, CUC adopted emergency regulations that enabled the utility to adjust the power rates depending on fuel prices.

But the regulations expired last month. Currently, CUC is back to charging residential customers 17.6 cents per kWh of power consumed.