CPA demanding lease payment for CUC facilities inside ports property

The Commonwealth Ports Authority wants to collect over $400,000 in lease payments from the Commonwealth Utilities Corp. for CUC facilities located inside ports authority property.

In its petition to the Commonwealth Public Utilities Commission, CUC officials disclosed that the ports authority is demanding lease payments totaling $464,564.

CUC chief financial officer Charles Warren told the commission that they were notified on June 3, 2011, that CPA will begin charging CUC lease payments for its wells and other facilities inside CPA lands.

Warren said that CUC is now reviewing this but, based on information and evidence it has uncovered, no such liability exists for CUC.

“CUC hopes that its interpretation will prevail, yet we recognize that there remains a possibility that CUC will be required to make some form of payment. Because CUC’s reserves are so low, I believe that it is prudent for CUC to plan for the worst and hope for the best,” said Warren, emphasizing that preparation should not be interpreted as an admission that CUC owes these payments.

Warren has suggested that CUC set aside the $464,564 and inform the commission about the matter. “It is merely a recognition that one does not always win, even if the facts are on his or her side, and must therefore plan accordingly,” he added.

CUC deputy executive director Alan Fletcher told Saipan Tribune yesterday that there are 58 wells and facilities that may be affected. Like Fletcher, he hopes that CUC’s interpretation will prevail so that the financially challenged agency won’t have to make the payment.

The potential lease payment to CPA was reported to the commission as an update to CUC’s interim financial plan, which was modified due to some items such as the surging oil prices that impact power, water, and wastewater rates.

Early this month, CUC filed a rate hike petition for water and wastewater, which the commission is expected to address in its business meeting in January 2012.

Another item reported in the interim financial plan is the increased employer contribution rate from 37 percent to 60 percent effective Oct. 1, 2011.

“I recalculated our budgeted retirement costs based on this new information [60 percent], and determined that the water retirement costs must be increased by $292,195 and the wastewater retirement cost must be increased by $53,298,” said Warren in his testimony to PUC.