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CUC to Senate: Reject rate discount proposal
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Posted on Jun 30 2008
The Commonwealth Utilities Corp. has asked the Senate to reject a bill granting discounts to consumers.
CUC executive director Antonio Muna said the $5.1 million CUC received for the rate credit has been used to pay for fuel in the last two months. Granting the discounts now will worsen CUC’s cash flow problem.
“We need time to restructure CUC’s finances. If CUC is to implement the credit now, we may not be able to pay for fuel,” Muna said in a Senate hearing yesterday.
He said CUC used $3 million of the rate credit funds in May, and $2.1 million in June. He noted that, in those months, the CUC rates in effect were insufficient to cover the cost of fuel and operations. The rate relief funds were used to make up for the difference.
There is a 45 to 60-day gap between the time CUC bills customers and the time the accounts become due. This month, for instance, CUC is still collecting the April billings.
A law, which allowed CUC to double the rates in May 2008, has reprogrammed $9 million for the rate credit program. The relief proposal, as approved by the House of Representatives, entails taking 30 percent off of residential billings and 10 percent off of commercial billings. The discounts are proposed to apply retroactively beginning May 2008.
Assuming fuel costs remain at their May levels, the $5 million now with CUC would be enough to pay for the discounts through mid-September 2008.
The measure is awaiting Senate action.
