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CUC has over $8M in cash but is barred from using it
The Commonwealth Utilities Corp. has over $8 million in deposits that are strictly off limits and cannot be used for other purposes. However, CUC board chair David Sablan Jr. said they’d prefer to use the money if the law would allow it.
According to CUC rate consultant Dan V. Jackson of economist.com, the over $8 million represents the deposit from new customers when they sign up for CUC’s services.
“That is restricted money and CUC is not allowed to use that for any other purposes. You can’t take deposits that customers make in good faith and when they disconnect they are going to get it back and what you are doing is you’re creating another obligation when they disconnect their services,” Jackson said.
The subject and the use of the funds came up during the meeting last week with the 19th Legislature’s Public Utilities, Transportation, and Communication joint committee meeting.
House Speaker Joseph P. Deleon Guerrero (Ind-Saipan) raised the issue with CUC executive director Alan Fletcher, asking how much security deposits does CUC have and if they were allowed to use it.
Fletcher said they have somewhere between $8 million and $10 million and it is in restricted accounts. He said CUC does not use that money and is legally prohibited from usingit.
One of the primary purposes of security deposits is to provide security on an account after a customer’s service is terminated and their last billing is generated.
Given the normal collection cycle for CUC, small corporations hold many commercial accounts with few assets. Once those corporations cease doing business, it is nearly impossible to collect outstanding amounts owed to CUC if security deposits were used.
This might take away a source that CUC depends on to collect, and this will in turn increase CUC’s bad debt levels, which could potentially lead to higher base rates for all customers.
Sablan said that they do that in Guam.
“We use that money. No restriction and what we keep in reserve is normally the amount that goes out. I’d prefer that we use that if the law could allow us, rather than involve more expenses,” he said.
