CHCC, DPW get disconnection notices

The Commonwealth Utilities Corp. served notices of disconnection to the Commonwealth Healthcare Corp. and Department of Public Works Wednesday afternoon due to unpaid power and water services amounting to $53.6 million and $1.2 million as of March 31, 2023, respectively.

A CUC administrative technician served the notice of disconnection to CHCC at 2:48pm and DPW at 4:10pm.

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CUC denied cutting power to CHCC yesterday.

In a statement late yesterday, CUC said it is aware of false information about CHCC’s power being disconnected yesterday, Thursday, April 20, 2023.

“CUC confirms that CHCC’s power has not been disconnected, and any information to the contrary is completely false,” the CUC statement said.

CUC did clarify that there is an ongoing issue regarding CHCC’s noncompliant solar photovoltaic system.

“Consequently, CUC issued a 30-day disconnection notice to CHCC today to address the violation with its solar [photovoltaic] system, which needs to meet the net metering interconnection requirements standards and safety regulations.

“CUC is urging the public to rely only on official information released by the corporation and to refrain from spreading unconfirmed information. CUC understands the importance of factual information and is committed to providing updates as the situation progresses.”

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In his demand for payment, acting CUC executive director Dr. Dallas M. Peavey Jr. informed CHCC chief executive officer Esther L. Muña and acting DPW secretary Ray N. Yumul that services will be terminated on May 4, 2023—14 days from the date of the notice—if payment or settlement is not made.

Peavey said the continued delinquent status of CHCC and DPW has adversely impacted CUC’s ability to provide reliable uninterrupted services to the community and adds to CUC’s already struggling financial health.

Peavey said CUC’s revenue allows it to make critical improvements to its infrastructure to maintain its role of providing 24-hour power, water, and wastewater services to the CNMI.

In response to Saipan Tribune’s request for comment, Yumul said yesterday that DPW has always promptly processed payment requests with the Department of Finance when DPW receives its utility bill from CUC.

“I believe the issue stems from last fiscal year’s ‘promise of [American Rescue Plan Act] as the source of funds’ to pay CUC,” Yumul said, adding that, as many people know, the ARPA funds were mismanaged.

Ray N. Yumul and Dallas M. Peavey Jr.

“I do question why DPW was targeted amongst all the other governmental customers of CUC,” he said.

Last week, Yumul issued a final notification to CUC over its alleged repeated violation of not restoring roads that it had cut up or dug up for its projects.

As press time, Saipan Tribune was still awaiting comments from Muña.

With respect to CHCC, Peavey told Muña that CUC has continuously communicated with the agency about its outstanding arrears that continue to grow and the importance of making timely payments for services rendered to CHCC.

Peavey said it is not in either organization’s best interest that CHCC continues to disregard its outstanding arrears, which will end up significantly jeopardizing the health and safety of the community when utility services interruption begin to impact the entire islands for even a short period of time as a result of CHCC’s continued delinquent status.

He noted that Muña had proposed a payment plan in June 2015 for CHCC to pay an initial $250,000, followed by monthly payments of $150,000.

Peavey said that CUC received the initial payment but the monthly payments did not follow as promised.

He said CUC and CHCC then entered into a Net Metering Intergovernmental Cooperative Agreement in December 2015 that was intended to eventually cause to lessen the cost of power and utility services for CHCC and the financial impact on CUC from liquidity challenges of CHCC, among other benefits and requirements for CHCC.

Shortly following the agreement, CHCC failed to make its payments as agreed in the NMICA, Peavey said, breaching the agreement that rendered it null and void with all payments due and owing to CUC.

Since then, he said, numerous correspondences and meetings transpired in attempts to collect and coordinate payment arrangements with CHCC.

In August 2020, CUC issued a disconnection notice to CHCC. Consequently, on Sept. 8, 2020, CUC shut off power to the hospital grounds after CHCC failed to meet CUC’s demand. That disconnection pressured the CNMI government and CHCC to enter into a payment agreement to pay CUC for CHCC’s utility billings, Peavey said.

He said CHCC paid a minimal share of $69,000 monthly while the CNMI government paid the bulk of the share of $150,000 monthly, for a combined total monthly payment of $219,000.

“That agreement expired in September 2021,” said Peavey, adding that the arrears, however, continued to accumulate month after month.

After the agreement expired, CHCC then requested for a six-month extension of the agreement, but the government did not agree to the extension. Thus, Peavey said, CUC denied CHCC’s request for an extension.

Despite CUC’s disapproval of the extension, CHCC continued to pay a significantly understated amount of $69,000 monthly, he said.

Peavey said the huge disparity between the monthly payment and the amount actually being billed to CHCC for its consumption on a monthly basis adds to the already extraordinarily large receivable from CHCC.

CUC records show that CHCC has an accumulated outstanding balance in the amount of $53,686,518 over several CHCC accounts as of March 31, 2023.

Regarding the notice to DPW, Peavey said CUC has continuously informed DPW as well as the Department of Finance of the outstanding arrears and the importance of making timely payments to CUC.

“As of today, there have not been regular payments or commitments to settle the arrears,” Peavey told Yumul.

According to CUC records, DPW has an accumulated outstanding balance in the amount of $1,122,565 over several DPW accounts as of March 31, 2023.