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Monday, April 21, 2014

CPUC suspends proposed standby charge for 8 hotels

Citing their discomfort against acting on something that they don’t have adequate information on, the three-member Commonwealth Public Utilities Commission on Wednesday suspended the Commonwealth Utilities Corp.’s request that a standby charge be assessed on eight of its large commercial customers.

The consensus was reached following the members’ agreement that further testimonies must be filed by CUC prior to the commission’s next regulatory session in two months.

“I understand why it [standby charge proposal] is there. However, the commissioners are just not comfortable in making determination [today] because every time we make decision, we want to make sure we have the right amount of information,” according to CPUC chair Joseph Guerrero.

He ruled that the commission needs to be given further testimony so the matter could be addressed at the April session.

Prior to issuing its final decision on the base rate petition Wednesday, the CPUC chair gave CUC officials an opportunity to make a “privilege comment” in an aim to air some of their concerns.

CUC chief financial officer Charles Warren disclosed that the suspension of the proposed standby charge would mean another month of potential revenue loss to CUC to the tune of $180,000 per month, or $2.2 million yearly.

He said the specific proposal has been endorsed to CPUC since July last year and was contemplated to become effective in October, the beginning of fiscal year 2014. But that didn’t happen.

“So we already lost this potential revenue for five months and further delays will have significant impact on CUC operation,” said Warren.

He said this will affect some stipulated order projects, equipment procurement as well as supplies.

CUC earlier disclosed that eight large commercial customers—primarily golf courses and hotels—obtain some or all of their power using their own generators. When their generators require planned maintenance or shut down unexpectedly, CUC picks up the slack. These customers do not pay for this standby service supplied by CUC.

Saipan Tribune learned that the total connected load of these customers is approximately 10 megawatts. In addition, four large commercial customers with a total load of 3 MW are completely off CUC’s electric grid and would not subjected to this charge.

Under CUC’s proposal, these eight customers that are getting a free generator backup service from CUC will now pay $20 per kW a month for using CUC as backup generation for their businesses.

Based on CUC’s estimate of 9,128 kW of connected load, the increase in revenue will be approximately $183,000 per month—or $2.2 million per year.

CUC executive director Alan Fletcher told Saipan Tribune that the agency will comply with the CPUC’s order for more information.

On Wednesday, the commission specified the supplemental information it needs to act on the standby charge. These include cost analysis of the proposed $20 per kW standby charge; the revenue that would be produced by the charge; comparable charges in similar jurisdictions; the impact which the proposed charge would have on each large commercial customer; and CUC’s plans and efforts to encourage large commercial customers to return to the grid.

The commission also required a cost analysis of the loss of revenue caused by the suspension of CPUC’s decision on the matter.

“We accept today’s ruling and we will move forward. CUC will follow the directions and decisions rendered by the commission,” Fletcher told Saipan Tribune.

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