CUC: LEAC hike likely in April

Due to the continued surge in oil prices in the world market, utility customers will be facing another likely increase in their monthly bills, according to a Commonwealth Utilities Corp. official.

Charles Warren, CUC’s chief financial and administrative officer, described the possibility of a power rate hike as “very, very likely.”

The Commonwealth Public Utilities Commission established a new LEAC tariff in a meeting in January.

Warren disclosed that even without the commission, the utilities firm can make the necessary adjustment because the January tariff allows an automatic adjustment of the levelized energy adjustment clause that will not exceed 4.5 percent of the current LEAC rate.

The present rate is $0.30550 per kWh—and 4.5 percent of that rate is equivalent to 12 to 15 cents of the current rate. LEAC is part of the customer’s bill that reflects the cost of fuel. The other element of the bill is the electric base rate.

“We’re very close [to the threshold]. We’re within 3,000 of a penny at present. So, it’s very, very likely that we will have an increase in LEAC for April bills if the market trend doesn’t change,” he told Saipan Tribune.

He pointed out, though, that the “automatic adjustment” authorized under the January LEAC tariff includes both an “increase and reduction” of the rate.

Warren said that CUC is closely monitoring oil prices everyday because any decision to increase or reduce the LEAC rate will depend on the data until the end this month. “We will have the final figures after the March data. We will do the calculation and we will certainly follow all the rules that CPUC set up in the tariff,” he said.

No filing is needed for the new adjustment once it is finalized and justified. CUC just needs to announce it once the adjustment is finalized. However, once the CPUC is reestablished, it will review the adjusted rate.

Warren indicated that in the last couple of weeks, gasoline stations on island have raised their fuel prices about three times already compared to CUC, which has yet to adjust one.

Saipan Tribune learned that due to a lack of funds, CUC can only afford to buy a one-week supply of fuel for about $1.4 million.

Warren emphasized the importance of collecting the agency’s receivables because it funds both the fuel and operation of the agency’s utilities: water, power, and wastewater systems.

As of this week, he cited about $8.7 million in receivables from CUC’s three biggest customers: the central government, public schools, and the public hospital.

Warren said that beside fuel expenses, a sizable portion of receivables is used to buy repair and maintenance items for power plants, water wells, and wastewater systems. “We are just one broken engine away from the same catastrophe we had four years ago, and we’re trying to avoid that,” he added.

CUC executive director Abe Utu Malae confirmed yesterday that PSS made a small payment of $3,000 yesterday for the restoration of power to the PSS central office.

Acting education commissioner Glenn Muña announced in a statement that Hopwood Junior High School, Koblerville Elementary School, and Tanapag Elementary School will resume classes today. These were among the schools affected by the power disconnections on Tuesday due to unpaid utility bills. The rest of public schools resumed classes Wednesday.

Malae disclosed that he and at least six education officials led by Board of Education chair Marylou Ada and Muña met to discuss the disconnected accounts.

“PSS and CUC met to carve out the Main Office account from those disconnected. PSS will pay the outstanding invoices in fiscal year 2012 for that office and CUC will restore power to it. The outstanding for the main office is about $27,000,” Malae said.

He expressed himself pleased with the results of the meeting. “I was pleased to see the key decision makers from PSS at the meeting because we also got to speak about other matters of mutual interest. PSS has done a marvelous job of conserving water and electricity. Furthermore, the Department of Public Works has given the green light on connecting renewable energy source to four schools; another two will follow once Public Works approves the grounding of the service connection,” he said.

Malae said that CUC restored electricity to offices of several schools Wednesday because the water re-circulating pumps were powered through the offices. CUC may not disconnect water to any school for public health reasons.