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CUC announces rise in Fuel Adjustment Charge
Following a rise in the average fuel prices, the Commonwealth Utilities Corp. will increase the Fuel Adjustment Charge pass-through rate, previously known as the Levelized Energy Adjustment Clause (LEAC).
The current FAC fuel charge of $0.13809 per kWh will increase to $0.14670 per kWh effective July 1, 2016. As a result, residential customers who use 500 kWh of power per month will pay approximately $4.30 more in their monthly billing.
CUC first instituted LEAC in 2009 to recover fuel and fuel related costs, a system also used by power providers in Guam and the Virgin Islands. In May 2015, the Commonwealth Public Utilities Commission authorized CUC to change the name of LEAC to FAC to provide customers a more accurate description of the rate.
The FAC is used to purchase fuel and serves as one of the two components that make up a CUC power bill. The second rate component is the electric base rate, which is used to fund operations, projects, and debt servicing.
CPUC granted CUC the ability to adjust the FAC rate based on the price of oil. Adjustments are made when the Mean of Platts Singapore (MOPS) monthly pricing equals or exceeds 4.5 percent of the average per gallon cost of fuel used in the calculation of the FAC rate.
CPUC conducts periodic reviews of CUC’s fuel charges to ensure that consumers pay no more or less than the actual cost of fuel. Although there is a slight increase in the July 2016 FAC, CNMI consumers have experienced an almost 60 percent decline in the FAC since 2014.
CUC is a non-profit autonomous agency of the CNMI government that provides electric power, water, and wastewater services to the islands of Saipan, Tinian, and Rota. (PR)
