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Thursday, April 24, 2014

Steep drop in power use in seven years
Revised residential rate blocks, standby charge for big customers pushed

The Commonwealth Utilities Corp. disclosed that both the number of its customers and their consumption of power continue to plummet, triggering a request for the corporation to revise its residential rate blocks and to allow it to assess a standby-charge for large customers that are connected to CUC’s electric system.

Documents obtained by Saipan Tribune show that in the last seven years, CUC experienced a dramatic decline in the amount of power used by its customers, mainly due to increases in the cost of fuel used by CUC to generate electricity.

In 2006, CUC had about 12,500 residential customers who used about 134 million kilowatt-hour of power. By 2013, a span of just seven years, those numbers have declined, with the number of customers plummeting to about 11,000 and their power use going down by more than half to about 56 million kWh.

According to CUC, the average residential customer in 2006 used about 895 kWh per month. In 2013 the average usage is down to about 350 kWh every month.

Saipan Tribune learned that one of the guiding principles of residential rate design is that the first block in an increasing block rate structure should roughly equal the usage of the average residential customer.

In a joint stipulation filed with the Commonwealth Public Utilities Commission, both CUC and the CPUC consultant, Georgetown Consulting Services, recommended changing the existing rate structure to factor in the decline in average residential use.

Since so few customers consume more than 2,000 kWh per month, they said the top block should be eliminated in the current structure.

Under the existing blocks, kilowatt-hour usage per month is broken into four blocks: 0–500 kWh; 501–1,000 kWh; 1,000–2,000 kWh; and 2,000 and above.

CUC and Georgetown recommend using only three blocks: 0–350 (kWh per month); 351–1,200; and 1,200 and above.

In a recent presentation to the commission, CUC officials disclosed that it has a total of 14,401 electric customers that include 10,878 residential users; 2,606 commercial users; and 917 government customers.

The proposed changes to the residential rate blocks is among the items the CPUC will decide on within the month or early January, along with other proposals such as the imposition of a standby-charge for large CUC customers who are hooked to the system’s power grid but rely mainly on their own power generators.

CUC officials, during this week’s public hearing, disclosed that the agency incurs significant costs serving customers who require only periodic or sporadic large purchases from CUC.

The proposed standby charge, once approved by CPUC, will only apply to customers who generate their own power exceeding 200 kW; are interconnected to the CUC grid; and purchase less than 10 percent of power from CUC.

The standby charge will not apply to customers with facilities that are used exclusively for emergency services.

Both CUC and Georgetown recommend a monthly standby charge of $20/kW per month.

CUC officials said that large customers can avoid paying this charge by disconnecting from CUC’s grid. Those who are disconnected and then opt to reconnect will incur a penalty charge.

By implementing this charge, CUC ensures that its small customers do not have to pay for capacity that is used only from time to time by large customers.

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