CUC sets aside three-fourths of budget for fuel

The Commonwealth Utilities Corp. is allotting three-fourths of its projected earnings on fuel expenses, shows the utility’s fiscal year 2009 budget plan.

The budget proposal, submitted to the House Ways and Means Committee, states that CUC expects to collect $138.8 million from customers in FY2009. Of that amount, $103.2 million will go to fuel and lubricant costs, $24.7 million will go to administrative and operations costs, and $10.9 will go to payroll costs.

The budget plan was prepared in September 2008, and does not take into account the recent decline of oil prices. It is not clear how the plunging fuel costs will impact the budget plan. However, CUC already has taken steps to reduce power rates.

According to CUC’s budget submission, power service collections are projected at $130.95 million, water service collections at $6.24 million, and sewer service collections at $1.64 million.

“Of the total operating expenses, CUC’s largest expense is production fuel and lube,” the budget notes. “The FY2009 budget projects total fuel and lube expense at $103.2 million, a 36.2-percent increase from FY2007 actual fuel and lube purchases at $62.2 million.”

CUC’s personnel costs, estimated at $10.9 million for FY2009, is down by nearly $1 million or 7.6 percent from FY2008. Of the total payroll cost, about one-fourth or $2.8 million is for retirement contributions.

The personnel count remains at 339. Although it remains the same as FY2008, the number represents the outcome of a steady decline since 2005, when CUC employed 400 employees. Out of the 339 authorized full-time positions, 270 are active and 69 are vacant.

CUC expects to spend $11.3 million on purchased power, including $4.6 million for Aggreko’s temporary power, $6.7 million for production out of the Puerto Rico power plant, and $1.2 million for Telesource CNMI’s production on Tinian.

In addition, some $2.5 million is set aside for debt service, including final payments to CUC’s long term debt of $0.9 million due to Telesource CNMI for the 10-megawatt power plant on Tinian, $0.46 million due to the Commonwealth Ports Authority for wharfage fees, and $1.12 million for the CPA sewer line project.

Furthermore, CUC allocates $5.4 million for repairs and maintenance. This includes $3.3 million for the engines at the power plants. The water division will receive $300,000 million, only about half of its $570,000 request. The wastewater division will get $310,000. CUC Rota will get $350,000 for general transmission and system repairs.

“All divisions require additional funding for [repairs and maintenance], thus, CUC is aggressively working on getting grants to assist with its necessary improvements,” CUC says.