Commonwealth Utilities Corp. executive director Alan Fletcher and CUC consultant economists.com’s Dan V. Jackson took turns explaining to Saipan Chamber of Commerce members and guests the need to increase water, sewer and electric base rates by Oct. 1, to help stem CUC’s annual loss of $6 million to $10 million, prevent increased service interruptions, and prevent the risk of bankruptcy and insolvency.
Fletcher and Jacskon said the rate increase is essential to help meet CUC’s goal of becoming a fully modern, self-sustaining utility.
“Unfortunately, improvements to quality come with a price tag, and that is reflected in this rate application. This is an investment in the future of your community and the CNMI in general,” they added.
Fletcher and Jackson were among the guest speakers at the Saipan Chamber of Commerce’s monthly membership meeting at Fiesta Resort & Spa on Wednesday last week.
In their presentations, they cited six goals and objectives for the rate application with the Public Utilities Commission.
These include eliminating operating losses.
Since 2006, CUC has lost $74 million in operating costs. In fiscal year 2012 alone, CUC was dealt with a $6.24 million loss. CUC loses money on every drop of water every kilowatt hour of electric service it sells.
As a non-profit entity, CUC only seeks to cover the cost it incurs in providing service.
CUC also seeks to meet all stipulated order requirements, and offset declining customer and volume base.
The agency also seeks to fund general operating and capital cost increases, assist with typhoon preparedness, and follow CNMI law.
CUC’s system is also old and is in bad shape. This means it has high risk of catastrophic failure.
Costs—such as fuel—are continuing to increase for many reasons that are beyond CUC’s control.
Despite all these, CUC has accomplished a lot in the last four years, Fletcher and Jackson said.
For one, CUC has eliminated the 2008-2009 rolling blackouts, reduced line losses, reduced leakages, and eliminated routine sewer spills or overflows.
Up to 95 percent of water users have 24-hour service, and 99 percent of customers are now fully metered, CUC said.
The agency has also funded major overhauls of plant and system and increased reliability of assets. These were also aided by federal grants.
“Major efforts were undertaken to improve customer services. All of this while struggling to buy fuel each week,” CUC said.
In July, CUC asked PUC for permission to increase utility rates by Oct. 1. It also asked PUC to give CUC’s lowest income customers significant additional credit to save them money on their bills and to limit the impact of the proposed rate hike.
Fletcher and Jackson said on Wednesday that if PUC approves the requested rate application, CUC customers would get improved quality, safety and reliability of service, a financially solvent utility, more convenience and ease in service provision, and less risk of catastrophic failure of service.