CUC defends doubled power rates

The Commonwealth Utilities Corp. has defended the recent doubling of power rates, saying it is actually charging less than what it should for fuel.

CUC executive director Antonio S. Muna in a letter to lawmakers said that the current projected price of fuel is $3.69 per gallon. This is four cents higher than the figure used for calculating the electric fuel rate of 35.7 cents per kWh.

The new rate schedule went into effect on May 3, 2008. Under the new scale, customers must pay a total of 37.3 cents per kWh for the first 500 kWh of usage. The rate increases with consumption.

Prior to May 2008, customers paid 17.6 cents per kWh for the first 1,000 kWh.

Muna also said the rate doubled because fuel costs increased by 92.76 percent while sales declined by 12.6 percent. “Decreasing sales has the effect of spreading more costs over a smaller revenue base,” he said.

In January 2007, CUC paid $1.92 cents per gallon and CUC billed customers for a total of 25.4 million kWh. At that time, CUC charged an electric fuel rate of 19.6 cents per kWh.

For May 2008, CUC projected a fuel price of $3.65 a gallon, and total sales of 22.2 million kWh, thus coming up with an electric fuel rate of 35.7 cents per kWh.

In addition to the fuel rate, CUC charges customers non-fuel rates starting at 1.6 cents per kWh, plus a fixed monthly charge of $5.60.

With the new rates, a customer who uses about 500 kWh can expect to pay $192. For a consumption of 1,000 kWh, the bill will be $403. Add another 500 kWh and the bill will be $625. For usage of 2,000 kWh, a customer will be billed $846.

Muna acknowledged the fuel subsidy provision in the law that reversed the power rates rollback and accordingly allowed CUC to charge the doubled rates. He said the subsidy could be given in the form of fuel credit, hence reducing the customer’s billing. But he said this may need additional discussion as to which customers—residential or commercial or both—should receive the credit.

Lawmakers maintain the subsidy is clearly for residential customers only, given that Public Law 16-2 reversed a law on residential power rates.

Muna’s explanation came in response to inquiries from the House Standing Committee on Public Utilities, Transportation and Communications, led by Rep. Victor Hocog, and from Representatives Heinz Hofschneider and Tina Sablan.