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Sunday, April 20, 2014

‘New CUC rate hike will put Dynasty’s survival to the test’

The only casino-hotel operating on the island of Tinian will face another major challenge in its operation, this time with the anticipated rate hike in utilities.

Tom Liu, general manager of Tinian Dynasty Hotel & Casino, is appealing to the Commonwealth Public Utilities Commission to carefully evaluate the proposed increases being asked by the Commonwealth Utilities Corp. Besides the rate hike, CUC also wants to impose revised or new fees on non-rate charges. A decision on many of these issues will be known after the commission’s regulatory meeting next month.

Saipan Tribune learned that Tinian Dynasty Hotel & Casino has been a CUC customer since 1998. Throughout those years, Liu said, the company experienced many rate hikes that affected the facility’s operation. In those times, the hotel managed to sustain its operation and survived.

But this may not be the same this time around, Liu said.

“Over the years, we have done everything possible to reduce utility usage to the extent of causing inconveniences to hotel guests by turning off corridor air-conditioning, turning off lobby air-conditioning from 10pm to 7am, and shutting down certain elevators when occupancies were low,” disclosed Liu.

The hotel also replaced all its light bulbs with energy-saving bulbs and even reduced the size of the casino to a third of its original size—again to conserve energy.

“We even turned off the hotel signages at the entrance [of the building] to save on utility costs, causing many guests [to wonder] whether we are still open for business as they don’t see any hotel signages lighted anymore,” Liu added.

Liu disclosed that Dynasty’s utility rates increased from .16 cents per kWh to the current .47 cents per kWh.

With the proposed rate increase, Dynasty is facing another rate hike of 20 percent—which means its current rate will go up by as much as .56 cents per kWh.

Liu disclosed that the hotel’s average utility bill each month is around $300,000—equivalent to $10,000 per day consumption.

“The anticipated increase of almost 20 percent will mean $360,000 per month! We are not in any financial position to pay such a huge utility bill and we cannot continue to inconvenience our guests. How much revenue do we need to generate to afford that utility bill?” he asked.

According to Liu, unlike hotels on Saipan, Tinian Dynasty is not allowed to use its own generators to generate its power needs. “We are not competing on equal grounds with hotels on Saipan. This is on top of additional costs for shipping and wharfage charges of business on Tinian,” added Liu.

In his appeal to the CPUC, he said: “Any more increases in rates will have a devastating financial consequence to our survival to continue operation.”

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