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Sunday, April 20, 2014

‘If govt pays its CUC bills, power charges would go down $5.5M’

If the CNMI government were to pay its utility bills on time, other customers of the Commonwealth Utilities Corp. wouldn’t have to pay so much for power and CUC would have more funds to pay for equipment, inventory, and maintenance, according to the utility agency.

In papers it filed with the Commonwealth Public Utilities Commission last Friday, CUC disclosed that CNMI government agencies currently owe the utilities corporation about $20 million—representing 20 percent of CUC’s annual revenue and 100 percent of its electric base rate revenue.

If the central government and its instrumentalities pay this amount and all its future bills on time, this would lower LEAC charges for all customers by about $5.5 million and increase the amount of cash available to by $2.3 million, CUC said.

The CUC documents show that CUC’s government accounts receivables increased dramatically from June 30, 2011 to Nov. 27, 2013. According to CUC records, government receivables increased from $5.2 million in June 2011 to $19.2 million in November 2013. This is an increase of 270 percent, with the increase for wastewater at 1,108 percent.

Of particular note is $11.6 million that has been outstanding for more than 90 days—a 604 percent increase in government accounts receivable outstanding for more than 90 days.

The electric system receivables, it was also learned, have increased from $3.8 million in June 2011 to $10.7 million in November 2013—an increase of 179 percent.

CUC revealed that $7.3 million of the electric receivables from the government are over 90 days and this reflects an increase of 462 percent from June 2011.

CUC policy mandates that it has to collect payment from customers within 45 days of issuing the bill. Customers failing to do so would be disconnected.

“The impact of the government bringing its receivables to the levels required by CUC’s rules and regulations would reduce LEAC charges for all customers by approximately $5.5 million, and increase cash available to pay for equipment, inventory and maintenance by $2.3 million,” stated CUC.

While the government has run up an $8.9 million electric bill payable over 45 days, it expects residential and commercial ratepayers to pay government-created obligations through increased rates in the following: $1.2 million for dividend payments on preferred stock with CDA; $1.33 million funded by commercial ratepayers as a result of Public Law 16-7; and an additional $130,000 in lube oil annually.

According to CUC, fuel expenses account for about 75 percent of bills. The result of reducing LEAC revenues for government bills unpaid after 75 days is that those amounts are charged to all other customers. Currently, it said, that amount is approximately $5.5 million.

Also, the electric non-fuel portion over 45 days is approximately $2.3 million, which is the cash that CUC has not received and which it can use for many purposes such as for equipment, inventory, and deferred maintenance.

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