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Friday, April 18, 2014

It’s final: CUC base rate hike petition, non-rate fees OK’d

The Commonwealth Public Utilities Commission formally adopted yesterday its final decision to approve the $2.8 million base rate petition and other proposals lodged by both the Commonwealth Utilities Corp. and the commission’s consultant, Georgetown Consulting Services.

CUC is now authorized to increase its electric base rates to produce an additional $2.8 million a year via the creation of an infrastructure surcharge.

The new rate and tariff adjustments will become effective on the day after the commission’s hearing examiner certifies that CUC’s tariff sheets are consistent with the decision.

CPUC chair Joseph Guerrero said yesterday that the step is a “procedural process” to ensure that tariff sheets are consistent with the rulings.

The tariff sheets, which will be coordinated between CUC and hearing examiner, will reflect how the rate changes will be implemented. Guerrero said the commission is looking at its implementation in a few weeks—perhaps in the next billing cycle of customers.

According to him, it’s a bit harder to calculate the base rate at this time because the Pacific Marine Industrial Corp. surcharge needs to be programmed and tested in the billing system.

Incorporated in the $2.8 million base rate petition is the $0.021 per kWh PMIC surcharge for all customers to fund CUC’s remaining obligations under the buyout agreement with the company. This surcharge should expire on Jan. 1, 2015.

According to CUC executive director Alan Fletcher and chief financial officer Charles Warren yesterday, the base rate decision actually means a reduction of rate for residential customers who consume 340 kWh per month or less because of the “credit” approved for them.

As part of its order yesterday, CPUC directed CIC to provide residential electric ratepayers with a $3.4 million refund. CUC is now authorized to institute a 36-month residential refund of $0.023 per kWh, which will come from the rate increase for commercial ratepayers.

It will be recalled that Public Law 16-7 mandated CUC to provide residential power users this refund. CUC should certify to the commission on or before March 1, 2017, that the refund and reciprocal commercial rate increase have been terminated.

“It’s actually a decrease [in rates] for residential ratepayers because of this credit. Those that are consuming over $340 kWh per month are the ones who will see a higher rate,” Warren told Saipan Tribune, adding that more than 60 percent of CUC customers consume 340 kWh per month or less so majority of its customers will see a drop in their base rates.

The base rate is one of the two components of a customer’s bill and funds the non-fuel expenses of CUC. The other is LEAC, or levelized energy adjustment clause, which is primarily for fuel expenses.

“Now that we have the order, we will go back on calculations and revise our rate tables in coordination with the hearing examiner who will guide us in the process,” Fletcher said.

CPUC also adopted its order approving selected 10 non-rate fees proposed by CUC for both electric and water, wastewater divisions.

New customer block

After hearing the rationale behind the recommendation to revise the electric residential customer block, the commission also approved a new customer block that reduces the four classifications to three.

Residential power customers are now those using from 0-350 kWh per month from the previous

The two other blocks in the newly approved customer structure are those using 351 to 1,200 kWh per month and those using 1,200 per kWh and above.

No pressure

CPUC members Joseph Guerrero, Dave Guerrero, and Oscar Quitugua told Saipan Tribune yesterday that they are “very confident” in the decision they made.

They cited the amount of time devoted by the commission in reviewing and analyzing all information before them since July of last year.

“We’re very confident in our decision. It took us a lot of work. We assured our customers that we’re here for them; we represent the people. CPUC is here to protect the public interest and we will continue to work in their best interest,” said Guerrero, adding the commission was truly independent in coming out with the decision.

“There’s no pressure and this is not a popularity exercise. Our fiduciary duty is really to look at it independently,” he said.

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