CUC vacates standby charge proposal

The Commonwealth Utilities Corp. board unanimously approved yesterday to withdraw the standby charge proposal that’s before the Commonwealth Public Utilities Commission—a few weeks before the scheduled business meeting of the regulatory agency.

Newly elected board chair David J. Sablan earlier said he is personally opposed to the standby charge, emphasizing the need for the agency to entice more customers to join its grid.

During yesterday’s CUC board meeting, Sablan reiterated his position, which was echoed by fellow board member Adelina Roberto, who said that “CUC needs to change its image with the public” and try to work collaboratively with its customers.

She reminded CUC officials present, led by executive director Alan Fletcher and CFO Charles Warren, that there should be a “give-and-take” relationship between CUC and its patrons.

After a lengthy discussion on the standby charge proposal, all four board members voted to remove the proposal before the CPUC and instructed legal counsel James Sirok to immediately submit an amendment with CPUC.

The standby charge is among the rate petitions CUC filed since July last year. This recommends a $20 per kW monthly charge for large customers and was projected to generate $2.4 million annually for the utilities agency. Those that would have been affected by the charge, had it been approved, are members of both the Hotel Association of the Northern Mariana Islands and the Saipan Facilities Management Association. Both strongly opposed the rate proposal.

Meantime, CUC officials reported to the board yesterday that because the agency will still need the funding requirement for its continued operation, a new proposal is being finalized that will replace the standby charge proposal.

According to Warren, an “introductory rate” is now being negotiated by all parties—CUC, CPUC consultant, and large customers—for the commission’s consideration later.

The proposed introductory rate (or incentive rate), he said, is to lure large customers to the CUC grid. If implemented, it is projected to raise $1.6 million annually, which is lower than the $2.4 million anticipated revenue from the standby charge.

When asked how CUC will cope with this shortfall, Warren said: “We’re assuming that if they get good enough rates, their usage would actually increase which means an increase in CUC revenues.”

Warren told Saipan Tribune yesterday that the “introductory rate/incentive rate” is a HANMI recommendation and will reflect a reduction of around 6 cents per kWh on the existing charge. This covers large customers who are connected but are not using the CUC grid.

“It could be a little bit higher or lower than 6 cents. We’re still working on the number and there’s continuous discussion on what is acceptable to the groups,” said Warren.

CPUC approval is needed on the proposed incentive plan. The commission will also determine how long the incentive rate will be in effect among identified customers.

Under the preliminary discussion on the matter, it was learned that the proposal includes the plan to take effect in three years, depending on the will of CPUC. This is CUC’s first time to propose an “introductory rate,” according to Warren.

Sablan said the board supports the “new recommendation,” provided that terms are acceptable to the parties.

At the April 2 CPUC meeting, the commission decided to put off any action on the standby charge proposal to its next meeting on May 22.

It is expected that the introductory rate proposal will soon be filed by CUC for the commission’s consideration next month.

Saipan Tribune learned that CUC has informed CPUC in an April 1, 2014, report that there are active discussions between parties on “incentive rate options” to encourage self-generating large commercial customers to become full CUC customers.