CUC seeks up to 56 percent hike for water, wastewater

The Commonwealth Utilities Corp. wants to raise its water and wastewater rates and to establish new fees and additional rates for certain charges.

The petition, filed Tuesday with the Commonwealth Public Utilities Commission, cites four elements beyond CUC’s control that warrant the rate hike: power cost increases, stipulated order requirements, declining customer base, and operating cost increases.

CUC says that increases in oil prices impact not only CUC’s electric rates but water and wastewater rates as well because these divisions use large amounts of energy.

While the per barrel cost of oil has declined from levels reached earlier in 2011, CUC said that the cost remains not only highly volatile but also a key component of the overall cost of water and wastewater service.

The stipulated order entered into by CUC and the U.S. Environmental Protection Agency also requires the utilities to incur millions of dollars in additional operation and capital expenses.

CUC officials, in testimonies submitted to the commission, also disclosed that CUC’s wastewater accounts have declined by almost 50 percent in the past four years. As accounts decline, usage dropped, resulting in lower revenues.

The petition also disclosed that many water and wastewater operating costs have increased due to inflation and other factors beyond CUC’s control and, like other businesses, when CUC’s costs increase “it has no choice but to pass these costs through its customers.” Without the needed rate hike, it said that CUC will continue to lose money, which risks bankruptcy and insolvency.

Based on an updated financial statement, CUC’s water division already has an operating loss of $3.1 million as of Aug. 31 this year. The wastewater division’s loss? $2.3 million

“We are caught between an increasing amount of expenses that have to be spread over declining number of customers and usage. This inevitably leads to the need for further rate increases,” said CUC chief financial officer Charles Warren in his testimony.

Water and wastewater rates were last adjusted in June 2010. CUC wants to implement the new rates on Feb. 1, 2012.

Once approved by the commission, the new rates will result in a 12 percent to 56 percent increase in the monthly billing of residential ratepayers.

Residential customers using less than 5,000 gallons will experience the lowest rate increase of 12 percent, from the current $20.55 to $23.07 monthly. Users of 5,000 gallons and more will incur the highest increase at 56 percent, from the existing monthly rate of $39.66 to $61.75.

Residential customers using 10,000 gallons and above will experience a 55-percent increase, from the existing monthly bill of $74.88 to $115.73, while users of 15,000 gallons and above will experience a 54-percent increase, from $112.23 to $172.38 a month.

For users of 20,000 gallons and above, the proposed rate will boost the cost from $155.03 a month to $232.64—a 50-percent increase.

For those consuming 50,000 gallons and above, CUC wants a 42-percent increase—from $430.03 to $612.39 a month.

The proposed rate plan does not include unmetered and flat rate customers because CUC intends to phase them out once the metering program is complete.

CPUC chair Viola Alepuyo told Saipan Tribune yesterday that the petition will not be included in the commission’s business meeting next month and has yet to say when it may be placed on the commission’s agenda.

Besides new rates for water and wastewater, CUC also wants to establish several new customer classes to gain a better understanding of the usage patterns of CUC’s customers and to ensure that eventually each unique customer class will pay its own cost of service. It proposes the creation of residential, multi-family, commercial, CUC, government, and public schools classes.

A 50-percent increase in the current tariff for sewer dumping charges is also being sought. The $25 fee was established many years ago for each dump of 500-1,000 gallons of concentrated sewage into CUC’s wastewater system. CUC said this fee does not cover the operational and administration costs of CUC. It wants to raise the amount to $50.

CUC also wants to charge $50 for inspection/testing for verification of backflow devices. The inspection of “check valves,” also known as backflow prevention devices, is a federal and NMI regulated program that is being developed. These devices are placed on residential, commercial, and industrial services. CUC also seek to establish fees for all “non-rate” services such as sewer dumping charges. The agency also recommends some revisions to its rules and regulations.