Muna: Levelized rates would help customers

A six-month levelized power rate could help the Commonwealth Utilities Corp. with prepaid meters and allow customers to plan for utility expenses, CUC executive director Antonio Muña said recently.

After studying CUC’s financial situation, the Georgetown Consulting Group, hired by the Public Utilities Commission, recommended a fixed six-month rate for the utility company. CUC currently sets monthly rates based on the price of oil.

Georgetown submitted the report in November and CUC could respond by Monday, before public hearings are conducted.

“We agree with the provisional rate as it is right now, to approve the current rate as a provision standpoint,” Muña said this week.

December’s fluctuating electric fuel rate is 20.7 cents, the lowest it has been in several months.

“I think the sixth-month rate situation allows the stability to look at how we address prepaid meter arrangement, so on one hand that will be a positive. On the other hand, this month-to-month change may be overwhelming” to customers, Muña said.

But there is still a lot of work that needs to be done to stabilize CUC’s financial situation, Muña added, noting the debt of $176 million owed the Commonwealth Development Authority.

PUC recognizes the need for financial stability, he added.

“When you’re looking at financials it tells you you’ll insolvent,” he said. “It’s difficult in accounting terms to project if it will be a growing concern, because of all of this burden of liability where debt exceeds assets. How do you cope with that?”

According to Georgetown’s recommendations, CUC would set the six-month rate based on the estimated cost of fuel for six months. To estimate the cost of fuel, three variables are used: system requirements (sales, uses and losses), generation dispatched and efficiency, and estimated per until fuel price.

The consultants’ report does note that because of CUC’s current financial state it could be difficult for the utility company to fund any large under-recovery stemming from the levelized rate. But there is a remedy, according to the report. PUC should consider a “cap” on the amount of under or over recovery. When reached, the rate level could be modified and approved by PUC.

In Wednesday’s continuation of a state of emergency for CUC, Gov. Benigno Fitial listed the levelized rate as one of his justifications for the emergency declaration.

CUC’s month-to-month rate fluctuations allows the utility company to pass through customers the increases and decreases in the world price of oil, he wrote.

“The rate freeze will prevent CUC from purchasing needed supplies and material, and, if world oil prices rise from the relatively low, economic-depression-based oil rate levels during that period, will prohibit CUC from buying the oil required to power all of its generators, including the generators of its three IPPs (independent power producers), Telesource, PMIC and Aggreko.”