Review of rate petitions costs CUC customers up to $500K

The chairman of the newly revived Commonwealth Utilities Corp. board, David J. Sablan, expressed deep concern yesterday over the fees being charged the utility agency by Georgetown Consulting, the consultant of the Commonwealth Public Utilities Commission.

Citing records bared yesterday, Sablan said the Georgetown billing is just too much for a small utility agency like CUC.

It was learned that in just one rate petition filed with the utilities commission, CUC spent about $300,000 to $500,000 to pay for the services of Georgetown.

As required by regulation, CUC must first seek the CPUC’s approval before any rate adjustments or changes in its tariffs. Georgetown, as CPUC’s consultant, reviews and assesses CUC’s rate petitions and charges CUC for its services.

Besides Georgetown, CPUC also has a hearing examiner that does almost the same task of “reviewing” and making “recommendations” to the regulatory body.

Sablan said he wouldn’t mind CUC spending so much for the review of a petition if the process is “quick and fast.” However, this is not the case with CUC’s petitions, which oftentimes take months to address.

“I know it’s not under our control…but it seems to me that these consultants are the ones running the show. I don’t mind if it’s a quick and fast [process] and have a very good set of questions and comments [regarding CUC’s petition]. But we just pay too much to review a simple rate case,” said Sablan yesterday.

He said the CUC board will appeal to the utilities commission, Gov. Eloy S. Inos, or the Legislature in order to stop the “unwarranted charges” being assessed by the commission’s consultant.

In an interview with CUC chief financial officer Charles Warren yesterday, he told Saipan Tribune the fees CUC pays Georgetown depends on the hours they work in reviewing the CUC petition.

“It depends on how many hours they put in our petition. Typically in a rate case, it’s anywhere from $300,000 to $500,000,” said Warren.

He confirmed, during the open session yesterday, that CUC paid some $500,000 in the last petition it filed with the commission.

Warren explained that the CPUC consultant usually gives CUC a volume of questions to respond to when deliberating on a rate petition. In the latest rate petition, CUC responded to over 600 questions.

For Sablan, however, “every time they drag on [a petition’s review] it means less revenue for us and more expenses. So it’s really a double whammy [for CUC].”

To emphasize his point, Sablan said the CPUC consultant and its hearing examiner are not even on island when they review and study these rate petitions.

Since some petitions have been constantly delayed as a result of reviews and recommendations from the CPUC consultant, CUC in actuality is already shortchanged when its petition is approved, Sablan added.

Under CPUC regulations, any fees incurred by its consultant in reviewing the petition filed by an entity must be shouldered by the petitioner.