Central government, public schools owe CUC $6M

Public Utilities Commission chair Viola Alepuyo is concerned about the Commonwealth Utilities Corp.’s longstanding practice of letting its paying patrons—residential customers and commercial businesses—subsidize the shortfall of its delinquent customers and for letting these delinquent accounts be reconnected without paying a single penny.

Of particular concern for Alepuyo are the burgeoning unpaid accounts of the central government and the Public School System, both of which top the list of accounts with huge unpaid obligations.

“Here’s my concern. We don’t want to put our kids out of the schools or lose federal funding because God knows we need them. But we also need to make sure that we keep PSS on its toes and pay what is supposed to be paid. If they can’t pay and they come in and promise a repayment plan, we have to make sure that it is based on good faith to act. It sounds like that it’s all words from PSS but nothing has been done. In the meantime, CUC still has to pay for fuel to continue providing electrical usage to people but it’s paying customers—the residential and businesses—who are subsidizing for them and that’s troublesome,” Alepuyo told CUC officials during yesterday’s meeting.

CUC chief financial officer Charles Warren disclosed that as of Sept. 30 this year, the central government owes CUC $2.4 million while PSS owes $3.6 million.

Warren said that CUC has $7.025 million in total government receivables as of September this year, with PSS’ and central government’s obligations representing the bulk of that amount. Other autonomous agencies’ debt total $772,511 while the Northern Marianas College owes $117,285.

CUC officials also disclosed yesterday that it had rejected the proposed memorandum of understanding submitted by PSS, which seeks to pass on $1.7 million of its unsettled account to the central government.

Although the central government has acknowledged that it will shoulder this $1.7 million debt, Deborah Fisher, CUC legal counsel, said that there was no clear repayment plan.

She said they are now drafting a new agreement that will set a definite time to settle this debt, whoever between PSS and the central government is responsible for this obligation.

The $1.7 million PSS obligation is being passed on to the government to offset the budget allotments for public schools that the central government failed to remit last fiscal year.

According to Fisher, CUC officials have also discussed the possibility of shutting down public schools, but in the end were asked to defer the action because PSS is going to pay. However, no deadline has been set by both PSS and CUC for this.

Warren disclosed that PSS was supposed to be disconnected since last week but because it requested some days to make the payment, disconnection notices were deferred. However, PSS has yet to make good on this promise and no school has been cut off from the CUC grid, he said.

According to Warren, CUC purchases fuel every other day and pays $1.5 million for this every week. The $6 million collectible from PSS and central government, he said, translates to a month’s supply of fuel. He confirmed that paying customers and CUC vendors subsidize the cash shortfall.

CUC vs power authorities in other areas

Although the problem of a delinquent central government is not unique to the CNMI, Georgetown Consulting said that there is a difference in how disconnection policies are implemented. He cited instances in Guam where portion of hospitals, schools, and government offices were cut off for some time due to unpaid government obligations for power and water.

The same has happened in the U.S. Virgin Islands, when its power authority cut off autonomous agencies’ offices and portion of its public hospital.

PUC also discovered that CUC had reconnected power and water without charge—a violation of its own policy—at the “request” of the administration or the Legislature.

Sen. Juan Ayuyu (Ind-Rota) and Rep. Frank Dela Cruz (Rep-Saipan) expressed disappointment with this practice and asked CUC officials to adhere to its own policy and regulations and remove the special treatment accorded the central government, including PSS.

CUC’s Warren disclosed that disconnection of power lines is “beyond my control but my bosses.”

CUC remains without a board of directors, so although it is no longer under an emergency, it is still technically under the Executive Branch.