Faced with criticisms about a potential increase in power rates next month and its failure to reimburse customers for a prior rate hike the purpose of which didn’t pan out, the Commonwealth Utilities Corp. stated that they used the money they raised to fund CUC’s other needs.
Under Public Law 17-62, which was enacted in December 2011, CUC was authorized to enter a $10 million loan from outside sources in order to satisfy the requirements of federal stipulated orders. CPUC approved this additional funding for CUC’s priority projects and CUC customers were assessed a higher rate to pay for this loan.
It will be recalled that for this supposed loan, CPUC ordered a $3.8 million base rate increase in June 2011.
The $10 million loan, however, didn’t work out but no reimbursements were made to ratepayers despite the order of the Legislature pursuant to a House resolution approved on August 2012 mandating CUC to reimburse customers for all sums collected or billed related to the loan.
In papers filed with the Commonwealth Public Utilities Commission on Dec. 6, CUC and Georgetown Consulting Services stated that “the $3.8 million base rate increase on Aug. 2, 2011 did not separately set out the $1.02 million in revenue requirements which CUC believed would be necessary to service the debt. CUC decided to use part of these rate revenues—approximately $1.5 million—in projects that were to be funded from the proceeds of the loan,” they stated.
Georgetown, the CPUC’s consultant, recommended that future rate awards for specific purposes should clearly state any limitations with regard to the ability of CUC to use funds for purposes other than what the CPUC intends.
Based on the audited report of CUC, the agency incurred an operating loss of $6.2 million in fiscal year 2012. This after the agency recorded the following: $103.9 million operating expenses; $95.7 million revenues; and $1.9 million revenue from non-operating. Of the $103.9 million expenses, the bulk went to fuel purchases accounting for 64 percent, while 28 percent was used for all others.