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Friday, April 18, 2014

Fees collected for failed $10M loan to stay with CUC

Hopes are dim for ratepayers who are counting on the return of the money charged them for the failed $10 million loan of the Commonwealth Utilities Corp. after the regulatory commission initially ruled that it will not require CUC to return the funds to customers.

The Commonwealth Public Utilities Commission made the ruling after hearing the recommendation of its consultant, Georgetown Consulting Services, who was tasked to review and assess the matter.

It will be recalled that CUC was authorized in December 2011 to apply for a $10 million loan with the Rhode Island-based Independence Bank to address the requirements of federal stipulated orders. CUC was allowed to increase its base rates so it could raise the funds needed to pay off the loan.

When the $10 million loan failed to push through, the House of Representatives adopted a resolution in 2012 mandating CUC to reimburse customers for all sums collected related to the failed $10 million loan. But this didn’t happen.

On Monday, the CPUC decided that, “in light of the liquidity crisis and the need to fund [stipulated order] capital projects, CUC should not be required to reimburse to ratepayers for any portion of the revenue stream” established by the then-CPUC order in June 2011.

Saipan Tribune learned that CUC managed to collect $2.5 million from ratepayers. This amount, according to its officials, was used to perform SO projects ($1.5 million) and for business expenses ($1.02 million).

Georgetown disclosed Monday that the “collections” were primarily used to substantially fulfill the same projects and undertaking if the $10 million loan had been successful.

Prior to deciding on the matter, CPUC chair Joseph Guerrero asked if the law that authorized the $10 million loan also allowed the use of funds for the agency’s “business expenses.” This issue, however, was justified by CUC and Georgetown, citing the corporation’s liquidity crisis.

It was also disclosed that the $3.8 million base rate increase on Aug. 2, 2011, did not separately set out the $1.02 million in revenue requirements that CUC believed would be necessary to service the debt.

Based on the audited report of CUC in fiscal year 2012, the agency incurred an operating loss of $6.2 million in running its utilities: power, water, and wastewater.

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