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Thursday, April 24, 2014

‘Proposed disconnection fees will cost PSS $45K’
»‘Potential hike in late charges will increase schools’ penalties 10-fold’

With not enough money to pay for this year’s utility consumption, public schools will be faced with an even bigger deficit if the proposed higher fees the Commonwealth Utilities Corp. wants to implement goes in effect.

Public School System finance director Derek Sasamoto disclosed that just for CUC’s recommended disconnection fee of $15, public schools would have to find an extra $45,000 to cover the cost.

Saipan Tribune learned that the system has 250 meters billed each month. If the $15 disconnection fee is factored in, this would cost at least $3,750 per month to PSS, or approximately $45,000 per year.

“Currently in our budget, we really can’t afford to pay this,” said Sasamoto.

The system only has a budget of $2.3 million for its utilities this fiscal year. This amount is far lower than what public schools actually consumed in the previous year, which is about $4 million. With the reclassification of water and wastewater rates this fiscal year, the projected utility cost is over $2 million.

Besides this potential increase in disconnection fees, Sasamoto said that PSS is also faced with the challenge of finding funds to cover the potential increase in late fees assessed schools.


CUC wants to increase its late charge from the current 1 percent of the past due amount to 10 percent of the past due.

“If this goes through, it will bring major impact to PSS because it is a 10-fold increase [over what we’re currently paying in late fees],” said Sasamoto.

This, he said, is on top of a proposed hike in the electric base rate from 12.4 cents per kWh to 13 cents per kWh.

“This means all our bills in terms of base rate will go up by 5 percent in every school and in the central office,” he said.

Sasamoto also noted the surcharge recommended by CUC to pay its obligations to Pacific Marine Industrial Corp. CUC wants an additional 21 cents per kWh to be assessed to its customers to cover this cost.

“There’s also the PMIC surcharge that is equal to additional 21 cents per kWh to our bills. The reason for this surcharge: CUC entered a contract with the PMIC and there’s penalty clause that says if CUC prematurely terminates the agreement it would be charged penalties to the tune of millions of dollars. But CUC went ahead and terminated the contract prematurely, incurring $4.1 million in penalties, which they now want to pass on to the ratepayers,” said Sasamoto.

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