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Wednesday, April 23, 2014

‘Redesigning the residential block structure will boost CUC revenue’

The Commonwealth Utilities Corp. wants to redesign the residential rate structure for its customers as a means to boost its revenue and collection, according to a supplemental report it filed with the Commonwealth Public Utilities Commission.

According to CUC consultant economists.com, the utilities agency proposes to redesign its residential rate structure by shrinking or compressing the size of the consumption blocks and to eliminate one of the rate blocks.

“CUC recommended this change because the continuing decline in residential electric average use per customer has resulted in more kWh consumed in the lower consumption blocks of the current rate structure,” said economists.com in its testimony filed on Jan. 3 with CPUC.

CUC data show that residential customers are using much less electricity and that the kWh usage and the number of customers whose usage end in the first block (0-500 kWh per month) increased from about 60 percent to almost 74 percent in the last four years.

In the top block (over 2,000 kWh per month), kWh usage declined from over 7 percent to 3.8 percent over the same four-year period and the number of customers that consumes more than 2,000 kWh per month declined by 50 percent from 2 percent to just over 1 percent.

“CUC is concerned that it would be unable to collect its revenue requirement with the current blocks because the revised rates at each level would cause further declines in usage and revenue,” states economists.com’s report.

CUC proposes to reduce the number of blocks in its residential rate from four to three and reduce or compress the blocks by lowering the kWh threshold.

Under its proposal, the first block will be customers using 0-350 kWh per month. CUC projects that this block will contain 60 percent of residential kWh usage and about 59 percent of residential customers. CUC said this structure is very similar to the residential rate blocks at Maui Electric in Hawaii, which is the same size as CUC.

Saipan Tribune learned that in the last eight years, CUC experienced a dramatic decline in electricity usage due primarily to increases in the cost of diesel fuel used by the corporation to generate electricity. It was disclosed that in 2006, there were approximately 12,500 residential customers who used about 134 million kWh. By 2013, CUC’s residential clientele has gone down to about 11,000. Kilowatt-hour usage also plummeted to about 56 million.

The average residential customer used to consume about 895 kWh a month in 2006. In 2013, the average usage was down to about 350 kWh every month.

The other blocks in the proposed rate structure are 351-1,200 kWh per month and 1,200 per kWh per month.

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