Shocking

When Saipan’s only movie theater closed its doors several weeks ago, the governor’s brilliant solution was to simply raise ticket prices. It’s only obvious that the higher prices will generate more revenue, and therefore cover the cost of goods and operations, and leave a little profit as an incentive to keep the doors open. However, it is also obvious that there will be less moviegoers because less people will be able to afford the price of a ticket, which means the prices would need to be continually raised. The outcome of this cat and mouse game would eventually leave a dozen or so people on island who could afford a $700 ticket to watch a new release.

We can just imagine the shock and awe on your face as you opened the Saipan Tribune yesterday to read that the already outrageous power rates are being doubled! Buying a movie theater ticket is considered a discretionary expense, and people have other options to get their entertainment fix for the week. Utilities, on the other hand, are considered a necessity, even though many have involuntarily stopped using electricity.

It didn’t take a rocket scientist to figure out that the short-term solution for the ailing utilities monopoly was to raise its rates to cover fuel and operational expenses. So when the government’s top bean counter stepped in to lend his expertise as the newly appointed executive director, it wasn’t too difficult to predict that his simply brilliant solution would be to raise the rates—and boy, did he.

Let’s consider this simply brilliant solution for other aspects of our life. The College could double their tuition rates for local and international students, grocery stores could double their prices on goods, car dealers could drastically increase the sticker price of an automobile, and gasoline stations could drastically increase their prices each time the price of oil goes up (oops, they already do that). What would be the outcome if all businesses and government agencies apply this simply brilliant solution? It would eventually leave a dozen or so people on island who could afford to live here. The short-term financial solution for CUC will have a long-term social and economic impact that may be irreparable.

Let’s consider the case of privately owned business owners who are trying to eke out a living by reducing their hours, turning their air conditioners off and running fans, or laying off people so they can operate on razor-thin profit margins. Many have had thousands of dollars in damage to electronic equipment because of the frequent blackouts and power surges, and they can’t even afford to replace the equipment. The news of even higher utility rates may be the last straw for many as they consider the feasibility of doing business on Saipan.

Consider Joe and Jane Average as they budget their expenses to the penny to try and eke out their existence. The higher fuel and power rates will eventually be tacked onto the goods and services they can barely afford now. Many thousands of dollars in damaged computers, air conditioners and other electronic equipment have not been replaced or repaired because they can’t afford it. The news of grossly higher utility rates may be the last straw for them as they consider the drastic drop in the quality of life in paradise.

So what’s the long-term solution? Unfortunately, it should have been done years ago and the longer the CNMI has waited has proportionally squared its difficulty to implement. The price of oil is destined to go up, which means the price of fuel, electricity, and all goods and services will continue to rise. Years ago when there was more money to explore other options, alternative energy sources should have seriously been considered. Some people have suggested using coal, nuclear energy, wave or wind power to turn generators. Each of these would lessen our dependence on OPEC and could provide reliable power. The big problem now is that it’s going to take a whole lot of money to consider these options, which is what CUC and the government is short of at present and future.

Will privatizing CUC be the solution? A private company will also go over the books and try to operate the company by the numbers—which doesn’t equate to lower utility bills, unless they drastically lower operating expenses (i.e., lay off a lot of people). A private company, however, may have the capital and expertise to switch to alternative fuels, replace generators with more efficient ones, and provide management stability. Any long-term changes will take months or years to implement, if—and that’s a big IF—action is taken right away. In the mean time, more and more people will be spending their evenings sitting in the dark because their power was disconnected, which is shocking.