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Sunday, April 20, 2014

New residential customer block approved

After hearing the rationale behind the recommendation to revise the electric residential customer block, the Commonwealth Public Utilities Commission approved the plan on Monday in hopes that the new structure will help the utilities agency raise the revenue it needs for operational improvements.

From four classifications under the existing customer block, CUC will soon implement a new setup that reduces the blocks to three.

Residential power customers will soon be classified as those using 0 to 350 kilowatt-hours per month. The previous block was 0-500 kWh/month.

The two other blocks are those using 351 to 1,200 kWh per month and those using 1,200 above per kWh per month.

The new structure is similar to the residential rate blocks at Maui Electric in Hawaii, which is the same size as CUC.

Over 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 declined to about 11,000 and kilowatt-hour usage also went down to about 56 million.

In 2006, the average residential customer used about 895 kWh per month but in 2013 the average usage was down to about 350 kWh per month.

During Monday’s hearing, CUC chief financial officer Charles Warren disclosed that the ultimate rationale behind the changes in the structure is to “capture the average power users of CUC.” He revealed that the existing customer block was set years ago when average power users were using 570 kWh per month.

CPUC member Dave Guerrero earlier asked if the revision has got something to do with Saipan “subsidizing” both Tinian and Rota customers. Warren, however, explained that regardless of what rate structure is in effect for CUC customers, Saipan users have always been subsidizing the two islands’ customers due to the higher cost of producing power for both.

Based on the supplemental information from CUC, the kWh usage and the number of customers whose usage ended in the first block (0-500 kWh per month) increased from about 60 percent to almost 74 percent over the last four years.

Also, for over 2,000 kWh per month users, kWh usage declined from over 7 percent to 3.8 percent over the four-year period and the number of customers that consume 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.

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