CPUC: No to debt service surcharge

Public utility regulators determined yesterday that the request for a debt service surcharge on electric customers is not reasonable, and that there was no immediate need for this relief as requested.

The Commonwealth Utilities Corp. was requesting an “interim debt service surcharge” to help pay off outstanding debt owed the Commonwealth Development Agency. CUC is required to pay back $4.32 million in deferred debt by October 2016.

The Commonwealth Public Utilities Commission had to answer this question: “Does the partial record persuade you that there is a reasonable and immediate need for the interim rate relief requested by CUC?” They unanimously voted “nay” to this.

The commission consultants, Georgetown Consulting Group, had argued against the surcharge in their testimony. They pointed out that there is already allotted $1.8 million for this debt repayment in a stipulated agreement between them and CUC.

During their meeting yesterday, this was commission chair Joseph C. Guerrero’s “biggest concern.”

“Why have none of those monies been paid to CDA? Should those be returned to the public if they have not been repaid?” he said.

“All of the buckets in any rate case are just that, they are buckets that should not be leaking toward other bucket,” he explained.

On the need for immediate relief, commissioner Dave Guerrero said “as a matter of transparency,” they should go through the exercise of presenting information to the public on this rate change.

Approving this charge on an immediate need basis would not have allowed for a public hearing.

Dave Guerrero said they don’t want to “pass something without the proper research and reflection on the record.”

CPUC chair Joseph Guerrero was also authorized to execute an order memorializing this decision.

An expedited review of this surcharge request was further granted. This was delegated to the commission’s hearing examiner.

This means that the debt service surcharge, which essentially continues an infrastructure surcharge that expired in April, may still be approved.

‘We are not double-dipping’

In an interview, CUC executive director Alan Fletcher sought to clarify the $1.8 million reserved in their rates that Georgetown alleged they had ignored.

“That is not exactly accurate,” he said.

“We will be filing information to Georgetown’s responses so we make it very clear to the public that we’re not double-dipping,” he said.

He explained that the 2013 accord CUC and Georgetown Consulting agreed to in 2013 did include $2.8 million in CDA debt service.

But just before the decision, when CPUC would have issued the final order, CUC withdrew $2.4 million of the stipulated revenue increase in “standby charges.”

“Our newly formed [board of directors] decided that they didn’t support that,” explained Fletcher.

Also, CPUC did not approve some $600,000 in non-rate revenues that were part of the agreement between CUC and Georgetown.

The result, said Fletcher, was that CUC only realized $100,000 in additional revenues.

“In the Georgetown report, they did not say all the information. They just say what was stipulated to, but not what the end result was,” he said.

Meanwhile, with that “small amount” garnered from the previous rate case, they have not received up to $5.9 million from government agencies this past fiscal year, he said.

“We build more than we collected,” he said. “That’s why we feel we need this surcharge target to debt service alone.”

This way the debt service monies are not intermingled with operational funds; instead they remain exclusively for paying CUC debts.

“How can we expect our customers to pay us if we do not pay our debts?” he asked.