CUC: Another LEAC cut in the offing

Customers of the Commonwealth Utilities Corp. may see a slight reduction in their monthly power bill after the utilities firm disclosed yesterday that it will file a petition for a new LEAC rate this month.

LEAC, or levelized energy adjustment clause, is a component of the power bill that reflects the cost of fuel. It is supposed to go up or down to reflect the cost of buying fuel to run the power plants.

CUC chief finance officer Charles Warren and deputy executive director Alan Fletcher confirmed with Saipan Tribune yesterday that they have already notified the Commonwealth Public Utilities Commission of their plan to set a new LEAC rate effective Jan. 27.

CUC proposes to reduce the LEAC rate from $0.30791 per kilowatt-hour to $0.29579 per kilowatt-hour.

Warren said that CUC had notified the commission about this possible rate reduction in the LEAC charge due to the lower price of oil in the world market. He warned, though, that this proposed reduced number could still change, depending on the oil price trend in coming days.

The last time the LEAC rate changed was on Nov. 11, when the commission lowered the LEAC from $0.34426 per kilowatt-hour to $0.30791 per kilowatt-hour, effective Nov. 20 to January 2011.

“This proposed rate is lower than the rate approved last November by about $0.012. The proposed rate is subject to change, depending on fuel price movements between now and the hearing date,” Warren said, adding that the “formal LEAC petition is not yet complete and the rate provided to the CPUC was for notice purposes.”

Warren said the proposed reduction is based on CUC’s calculation of fuel price as of last week. “[If] the oil price goes down again.we will do our analysis again and if it continues [until the hearing date], it could be the same [figure],” he added.

Warren could not immediately quantify yesterday the impact the adjustment will have on average residential customers.

According to Fletcher, both CUC and Georgetown are working hard to come up with a LEAC rate that both could agree on. A final petition for the new LEAC charge is expected to be filed prior to the commission’s Jan. 21 public hearing.

The LEAC rate is subject to review every six months. There is a move to change this to the monthly fuel adjustment clause, MFAC, where the LEAC rate would be calculated on the first day of every month. The commission is expected to act on this petition on Jan. 21.