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Thursday, April 24, 2014

CPUC urged to take ‘careful’ approach on Telesource contract
‘Change order means $33M rate burden to customers for 15 years’

The Commonwealth Public Utilities Corp. was cautioned both by its consultant and hearing examiner on its decision on the Telesource contract, saying this would cause a $33 million rate burden on customers if approved.

Harry M. Boertzel, CPUC hearing examiner, stated in his report to the regulatory body on Dec. 24 that CPUC should take a “careful, deliberative approach” on the change order.

Prior to this report, the commission’s consultant, Georgetown Consulting Services, asserted that the recommended change order in the Telesource contract is “unreasonable, unnecessary, and should not be funded.”

Telesource CNMI Inc. is the independent power producer that operates the Tinian power plant. In November 2010, CUC petitioned CPUC to approve a change order in its June 1997 contract with Telesource. Saipan Tribune learned that the contract has already undergone four change orders and the latest is the fifth.

In November 2011, CPUC provisionally approved the change order, subject to its being funded through a base rate increase. In January 2012, CPUC considered but rejected CUC’s request to fund the change order.

According to Boertzel, the change order “represents a significant regulatory decision as its funding would cause an additional $33 million rate burden on electric customers over its 15-year term.”

Boertzel reminded the commission that the provisional approval of the change order occurred before the current commissioners assumed office. He also disclosed that tapes of the three public hearings and three business meetings at which the change order was considered have disappeared.

In the hearing examiner’s report, Boertzel recommended to CPUC that the Telesource issues be tabled until the spring session. He also asked to be authorized to facilitate discussions between CUC, Georgetown Consulting, and Marianas Energy Technology Inc., to which Telesource has assigned and transferred its interest in the Telesource contract.

The discussion will focus on whether Telesource’s assignment of interest in the contract to Marianas Energy Technology satisfies the requirements of the contract; and to determine if adjustments to the change order terms could produce a joint recommendation for its funding through base rates. Lastly, the discussion between parties will also tackle if the title to the Tinian plant and related assets will be transferred to CUC pursuant to the contract provision.

Non-rate fees

Meantime, Boertzel supports creating a new and revised non-rate fees for power, water, and wastewater, as jointly recommended by CUC and Georgetown.

“The non-rate fees should be approved, subject to their terms and conditions being reviewed and approved by hearing examiner,” stated Boertzel’s Dec. 24 proposal to CPUC.

CUC and Georgetown earlier agreed to propose 10 new or amended electric non-rate fees and nine new or amended water and wastewater non-rate fees for CPUC approval.

Among proposed electric division non-rate fees is an increase in the non-sufficient funds fee from $25 to $40; increase in new service fee for meter change out from $60 to 95; an inspection fee of $90; increase in meter test fee for single phase from $30 to $75; meter test fee for three phase, $110; and disconnection notice fee, $15. CUC wants to maintain the $60 fee for reconnection at meter while it wants to reduce the disconnection fee at meter from $60 to $45.

CUC and Georgetown also agreed on a limited number of non-rate service fees for water and wastewater divisions, which include lab service charges of $60; increase the wastewater tipping fee from $25 to $80; imposition of $100 as fee for backflow device inspection; FOG installation inspection fee of $170; FOG biannual inspection fee of $60; and FOG remediation fee of $110.

These fees will not be paid by everyone, only those customers who use a particular service. CUC earlier said it is proposing these changes to the non-rate fees in order to keep regular rates as low as possible.

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