CUC pays Telesource $357K for diesel supply

Saipan’s primary electricity supplier, the Commonwealth Utilities Corp., is preparing to settle a major unpaid debt to a company on Tinian that resulted in power outages on the island and later prompted a stern rebuke from lawmakers.

In an interview Thursday, CUC executive director Antonio Muna said the utility plans to pay Telesource, the company that operates Tinian’s power plant, the money it is owed “by Monday” of next week.

Muna added that he signed off yesterday on roughly $357,000 as payment for the power plant’s diesel fuel needs after Telesource declared in a statement the same day it had only a one-day supply and would have to cut power unless CUC provided more.

Whether or not the fuel would reach Tinian before the island lost power was unclear as of press time. In its statement Thursday, Telesource said that CUC “has a contractual obligation” to supply the fuel and cautioned customers that “power on Tinian may be shut down imminently if the fuel tanks are not replenished.”

On Wednesday, Telesource demanded that CUC pay its monthly debts to the company for operating and maintaining the power plant, saying the CUC had failed to make its payment for the month of May on a series of $180,000 promissory notes. This breach of contract, according to strongly worded letter from Commonwealth Sens. Jude Hofschneider (R-Tinian) and Henry San Nicolas (C-Tinian), forced Telesource to deny power service to some customers on the island.

Telesource’s general manager Jeffery Barr in a June 4 letter to Muna said the company needs the payments to meet the obligation of third-party loans and without it, Telesource cannot pay for supplies like lubrication oil.

Muna explained that CUC was unable to make the payments on time because the utility is facing a long-standing funding shortfall even after its recent rate hike.

“The bottom line is that CUC’s financial condition is adverse,” Muna said, noting that the utility has an estimated $9 million in debts, many of those owed to Telesource.

CUC’s increase in rates, he added, still carry a “two-month” lag between the time customers pay the utility and when that money is available to fund repairs, maintenance and pay off debts. CUC is working on a plan to pull itself out of its current financial trouble yet without more funding from the government, the utility’s options are limited, Muna said.

On Tinian’s fuel needs, Muna added that the high cost of diesel fuel has contributed to the problem, although CUC tries to maintain an 11-day supply on the island.