CPUC postpones decision on standby charge

The Commonwealth Public Utilities Commission calendared for next month’s public hearing its decision on the standby charge being proposed by the Commonwealth Utilities Corp. for large commercial customers that primarily use their own generators for their daily operations.
In a public hearing yesterday at the Commonwealth Development Authority’s office in Oleai, CPUC chair Joseph Guerrero said the controversial standby charge still needs to be reviewed before the regulatory body makes its decision.

Guerrero said the proposal went through careful consideration and had been put through five provision orders that were adopted yesterday morning until the next public hearing on May 22, 2014

Meanwhile, the Hotel Association of the Northern Marianas Islands and Saipan Facilities Management Association are in negotiations with CUC regarding possible new tariff charges in lieu of the standby charge.

CPUC hearing examiner Harry Boertzel said that provision 3 of the order on the document had been amended. Provision 3 states, “CUC has informed the commission in an April 1, 2014, report, that there are active discussions between it, SFMA, and HANMI on incentive rate options (alternative tariff) to encourage self-generating large commercial customer to become full requirement electric customers. …The hearing examiner is authorized, in consultation with the parties and participants to determine whether CUC should craft this alternative tariff or whether it should be prepared by Georgetown Consultant Group.”

According to Boertzel, the previous order had Georgetown supposedly drafting an alternative tariff, but based on CUC consultant Robert Young’s report, provision 3 needed to be revised.

Young said that he had been in continuous discussions over the past couple of weeks with almost every member of HANMI and majority of the SFMA to see if there is an arrangement, “an incentive rate to get them to come back into the grid.”

“There’s been tough and frank decisions, but I think were getting close and I would expect within three weeks we could probably file a proposal for review in consideration with the CPUC, its consultants, and [Georgetown Consulting],” Young said.

CUC counsel Deborah Fisher said that CUC wanted to briefly discuss the standby charge issue: the tariff that CUC “originally asked for versus the large customer tariff.”

“We want to make it clear that the standby charge is going to be something different than any kind of commercial tariff that could be developed,” Fisher said.

According to Fisher, they have been discussing the matter with HANMI and SFMA representatives and are looking to try and find solutions to help everyone.

“But at the same time we have the standby tariff which comprises a $2-million base rate that was found to be necessary. Not only that, it’s about the fact that utilities around the country have some form of standby charge,” Fisher said. “Without that in place, it leaves us in a position where were not able to make up or to even address the issue of large customer on a standby position,” she added.

According to Young, the actual number for the revenue fee is $2.5 million and CUC has not collected it.

“We need some form of rate relief on that. If a customer is purchasing all or substantially all of their electricity from CUC, the electrical standby will not apply to them, in addition for those customers that are completely off the grid and the standby charge would not apply to them,” Young said.

“If we can reach an agreement to have all or substantially all to come on to the grid and buy all of their power from CUC, the standby charge in essence would be ‘moot’ because it wouldn’t apply to any customers,” he added.

Young noted that discussions are still ongoing between the two groups and CUC and that no agreement has been met and neither present rate structure or revenue have yet to be disclosed.

SFMA representative Mark Moss said that they have commenced negotiations with CUC regarding possible new tariff charges.

“We haven’t spoken directly; we’d like to hear it from CUC,” Moss said.

Fisher said that they’d have that discussion later on.

After the public hearing, Saipan Tribune asked Guerrero on his thoughts about the alternative tariffs.

“The hearing examiner representing the commission and CUC will effectuate [that] because this is a procedural matter that should be resolved soon,” Guerrero said.

Fletcher also noted that CUC is in trouble due to the recovery of the cost they need for utilities.

“CUC is still in a tenuous financial condition,” Fletcher said. “As far as the holding off until May and any action on the standby charges or looking toward an incentive rate to get the hotels on, we’re going to work with the process and have great discussions with HANMI and SFMA. We’re all trying to make this work out.”