Georgetown: Junk proposed late fee, defer 5 other charges

The consultant for the regulatory commission strongly recommended yesterday the denial of two proposed non-rate revenue fees being sought by the Commonwealth Utilities Corp., while recommending the deferment of five other proposed new charges.

During yesterday’s five-hour evidentiary hearing conducted by the Commonwealth Public Utilities Commission, Georgetown Consulting Services experts Jamshed Madan and Larry Gawlik said that CUC’s proposed non-revenue fees are unreasonable, methodologies used are inappropriate, and cases may potentially conflict with existing CNMI laws.

In particular, Georgetown asked CPUC to deny the proposed increase in the late charge—from the current 1 percent of past due amount to 10 percent of past due—which translates to a 1,000-percent increase. If converted to an annual interest rate, this is equivalent to a rate of 120 percent. According to the two experts, the 1 percent late charge is consistent with best practices employed by the industry and no change is necessary. Although CUC pointed out the need to raise revenue, it, however, failed to quantify the projected revenue from this fee.

They also asked to deny the proposed $220 fee for disconnection at the pole. CUC has asserted that the proposed fee would be assessed only when a customer is disconnected for non-payment. Likewise, when the arrear is paid, CUC proposes a reconnection fee of $200.

For Georgetown, these two fees will total $420, which it described as excessive and not consistent with best industry practices. It said a simple case of nonpayment should not result in a consumer incurring a charge of $420 to have the service restored.

Five other recommended rates were asked to be delayed: the $450 new service electric-single phase fee; the $800 new service electric-3 phase; $725 new service connection after hours; the renewable energy install inspection fee of $690; and the proposed $125 renewable energy annual inspection fee.

For the new service connection fees (for single, three phase, and after-hours), the deferral was sought after Georgetown disclosed that CUC provided inadequate actual cost data to support these fees. The fee levels, Georgetown said, are high when compared to comparable fees at other utilities. The proposed fees for these three services also include components of costs that are disallowed by mainland regulatory jurisdictions.

For the renewable energy installation inspection and annual inspection fees, these were recommended to be delayed by CPUC pending a legal review.

Meantime, Georgetown affirmed its support for four specific non-rate fees endorsed by CUC: $210 investigation fee for electric; $200 reconnection at the pole fee; the $550 unauthorized connection fee for electric; and $1.50 for convenience fee.

Economists.com justifies recommended NRR

Economists.com managing director Dan V. Jackson yesterday testified before CPUC about the reasonableness of CUC’s recommendations. He disclosed that CUC only generates a meager 3 percent from its non-rate fees annually. Of this 3-percent revenue, 2 percent comes from late charges. CUC, he said, has 80 non-rate fees of which only five items were contested by the CPUC consultant. He explained the purpose and objectives of the recommended fees and how it is badly needed by the cash-strapped CUC.

He said what CUC aims to establish are “standard or average” fees for the cost of services it provides customers. He provided justifications on how economists.com came up with specific fee recommendations, which he said majority was based on how CUC actually provides the services.