Surprisingly, more CUC gibberish

In an article published on Monday, CUC executive director Muña made several statements regarding how he arrived at and justifies the current residential billing rate of 35.7 cents per kWh. However, his “explanation” falls far short of justifying those rates, and if this is all he submitted to the PUC, then the PUC needs to take a hard look at what’s going on.

At first, I believed that the new rate was about right. Like it or not, I felt that it probably did approximate the current cost of producing electricity in the CNMI. However, after reading what Mr. Muña stated, I have some real doubts—but there was not nearly enough information presented to reach a conclusion based on fact.

Last October, P. L. 15-94 set the residential fuel rate at only 17.6 cents/kWh, several cents below its actual cost, thus causing CUC to operate at a loss that was supposed to be “subsidized” by—who? In his first statement, Mr. Muña said that fuel costs went up by 92.76 percent—or nearly double—and the implication was that this happened since February.

That simply is not true. In fact, fuel cost did not increase that much even if you go all the way back to last October; it was actually something like 50 percent, from about $80 per bbl to about $120 per bbl—and that’s from October, not February. But this was not even the most disturbing statement.

Mr. Muña stated that actual fuel (and oil) cost in February was $5,720,195 and that CUC “billed” customers $5.3 million leaving a short fall of only $390,607—as it now turns out TO BE BILLED IN MAY to CUC customers. But remember the residential rate was only 17.6 cents per kWh in February. Nowhere does he indicate how many kWh’s were generated and billed for, nor is the residential portion specified. Absolutely no conclusions based in fact can be drawn from such general and nebulous figures as were given. But it appears, from what was given, that IF CUC can recover almost all its fuel cost through billing at the residential level of 17.6 cents, then there is a lot that is NOT being said.

For instance, my calculations, based on the above statement by Mr. Muña, indicate that IF every individual or business being billed during February could have been billed the mere sum of 1.25 CENTS more per kWh, for a total of 18.85 cents residential and the equivalent non-residential rates, there WOULD HAVE BEEN NO SHORT-FALL IN FEBRUARY!!! Looks like, now YOU will be subsidizing that shortfall in May and every month thereafter. Ahhhh, we finally know how CUC expected to make up the difference between the legislatively mandated 17.6 cents and the actual cost—smoke, mirrors, and spit—it was there all the time!

So what does this indicate for the current period? Mr. Muña states that he used a projected usage rate of 22.2 million kWh’s for May and a fuel (and oil) cost of $7,931,308. This is a projected increase in fuel cost of about $2,211,113—or about 39 percebt, and that’s from February, not April. Unfortunately Mr. Muña did not say how many kWh’s were produced and sold in his self-assigned “base” month of February, the shortest month of the year! He based the rate of 35.7 cents on projected sales of 22.2 million kWh and projected fuel costs of $7,931,308. Where did that figure come from? How many gallons of fuel were bought in February? How many gallons will be bought in May? What were the kWh sales in February? How much was residential as opposed to non-residential? How much of the residential billing was for kWh in excess of 1000? A major question now is the kWh sales figure difference between February and May. Is May’s figure higher or lower? If higher, why, and does Mr. Muña really expect people to use MORE electricity at the very high rate that few can afford to pay?

Mr. Muña stated that even the 35.7 cents may not be enough for full recovery in May. There just isn’t enough data presented to make a “real” projection out of this, BUT, even without critical data, it would appear that the 39 percent increase in fuel cost from February’s rate (adjusted for full recovery as explained above) of 18.85 cents should have resulted in a new residential rate of around 26.25 cents per kWh (39 percent greater than February and about 50 percent greater than November). That’s a big difference.

Sounds to me like CUC may be using some of that lubricating oil for something besides its engines. PUC, you got a lotta work to do before you allow this to continue! Of course, the CUC figures could work out to be true, but the point is that CUC has only served, so far, to foment speculation, distrust, and anger in the public—and the hole gets still deeper yet.
[B] Dr. Thomas D. Arkle Jr.[/B] [I]San Jose, Tinian[/I]