Millions lost from lack of CUC billing

The wastewater division of the Commonwealth Utilities Corp. incurred a deficit of nearly $4 million during the last fiscal year, while millions of dollars that should be going to the division is being lost because of a loophole in the law that allows some non-residential customers to go unbilled for service, according to the Georgetown Consulting Group.

Two areas in the wastewater billing process differ between residential and non-residential. For residential customers, whether metered or unmetered, they must pay a customer charge and are billed according to usage. But unlike residential customers, non-residential customers, whether metered or unmetered, do not pay a customer charge.

“That’s pretty rare and a little bit strange, quite frankly,” said Georgetown consultant Larry Gawlik before the Public Utilities Commission yesterday.

But the bigger discrepancy is the fact that unmetered non-residential customers are not billed for usage at all.

“When you look at the nonresident customers, you’ll see they can be billed if they have meter service, but if there is unmetered service, for some reason they can’t be estimated. The law doesn’t allow for them to billed,” Gawlik said.

He said he would not disclose names.

“But let me just assure you there are some significant customers that fall in this group,” he added. “In essence, they aren’t paying any money at all for wastewater service. And that’s just one example of many of the things that will be in the revenue cycle that, quite frankly, needs to be cleared up. That, I suspect, will literally be worth millions of dollars.”

Also, Gawlik said CUC has a high rate of uncollectible accounts.

Typically, he said, a water utility will have an uncollectible allowance of a half percent.

“So, in other words, they’ll send out $100 worth of bills and collect everything but half a percent,” or 50 cents, he said.

“In CUC, that number is much higher. We have not been able to get our hands around it because it varies a lot, but it certainly appears to be significantly higher,” Gawlik said. “I mean well over a factor of 10 higher, well over a factor of 10.”

The information came out as proposed rate increases for wastewater, which have remained unchanged since 1987, were discussed. Both CUC and Georgetown agree wastewater rates should increase by 173.4 percent effective April 3, 2009, provided, however, that 50 percent of the increase should be suspended for approximately 60 days “[t]o permit the CNMI government and/or its entities to identify and tender to CUC funds from alternative sources,” the agencies wrote in their stipulated agreement.

Some of those sources include stimulus funds, Section 702 funds and $3.2 million in delinquent utility bills owed by the Public School System.