Muña nixes giving up control over CUC’s cash

The Commonwealth Utilities Corp. believes the executive director should continue to individually manage the utility agency’s cash, despite a recommendation from the Georgetown Consulting Group that the practice stop.

Removing cash management from the executive director is neither practical nor desirable in the short term, CUC executive director Antonio Muña said in pre-filed testimony before the Public Utilities Commission.

In earlier testimony, the Georgetown Consulting Group said the practice is affecting CUC’s ability to reach full cost recovery and accountability.

“The executive director literally on a day-to-day basis makes decisions about what bills get paid or delayed and what projects get authorized or deferred across all three utilities. All cash is co-mingled and payments are made without regard to the source of funds, the purpose of payments, or formal and rational resource allocation protocol. This is not an appropriate way to operate any business, much less water and wastewater utility and we recommend that the [PUC] require that this practice cease with the order in this proceeding,” GCG wrote.

However, Muña testified there are at least two reasons he should not be ordered to refrain from managing cash.

“First, such an order would go beyond regulation and inject the commission into day-to-day management of the corporation,” he said.

Second, it would be counterproductive, the director said.

“Presently there is simply not enough money coming in to do the many things that CUC must do merely to keep its combined system running. This task, an unwelcome task, is necessary,” Muña said, adding that someone with the whole picture of the corporation must make decisions, and make them quickly in certain instances.

CUC looks forward to the day when things can change, but it lacks many of the necessary elements presently, he said. CUC has hired Deloitte Touche to help fix financial reporting, Muña said.

The utility agency also disagreed with Georgetown’s recommendation to cease the commingling of funds between each utility.

It’s a matter that CUC will soon have no decision over, Georgetown noted in their testimony, as federal stipulations will require that water and wastewater revenue from any source only be applied to expenses and investments in water and wastewater operations.

Bur CUC contends any change right now could create a disaster.

“There simply is no money available for the water and wastewater systems, because the rates for these systems are, and have been for 20 years, set way below cost,” Muña said in the testimony. “If we separated the CUC’s lines of business right now, the water and wastewater systems would collapse—we would not be able to buy materials, supplies and spare parts, and we would increasingly have to lay off our employees.”

Rates

At this point in time, CUC customers can’t sustain a 50 percent rate increase for water and wastewater, Muña said, adding that the agency is open to discussions and problem solving.

Georgetown had recommended that PUC set rates at no less than 50 percent of the full cost recovery. For wastewater, the current rate is $5.50 per 10,000 gallons. This would go up to $13.44 under a 50 percent provisional rate increase. For water, the current rate is $25.80 per 10,000 gallons. This would go up to $43.23 if the provisional rate were set at 50 percent. For water and wastewater combined, customers using 10,000 gallons of each would go from paying $31.30 to $56.67.

Perhaps a solution, according to CUC, would be to allow a schedule of predictable step increases.

“We would like to avoid a public response that addresses the frustration of increased rates without an appreciation of the ‘good deal’ that customers got for years of extremely below-cost rates (albeit with poor service and product quality, which is to be expected from below-cost rates),” Muña said.

The PUC will hold a public hearing Friday at 1pm in the Senate chamber on Capital Hill, where both sides will give their testimony.