Higher power base rate OK’d; takes effect today

A new electric base rate for customers of the Commonwealth Utilities Corp. takes effect today, June 7, increasing the base rate charge of average residential customers by about 1.9 percent and commercial customers by about 5.1 percent.

The Commonwealth Public Utilities Commission approved the base rate hike yesterday, over a month after it approved an increase in the levelized energy adjustment clause, or LEAC, rate.

Under the approved rates, customers using 500 kWh or less will be charged a monthly rate, while those consuming more than 500 KWh will be charged at per kilowatt-hour rates.

For residential customers using 500 kilowatt-hours or less each month, their electric base charge will go up from $5.60 to $6.62 a month.

Residential customers using between 500 kWh and 1,000 kWh will pay 0.0780 per kWh from the present rate of 0.0660 per kWh.

The base rate goes higher for residential customers using 1,000 kWh to 2,000 kWh, from the existing 0.0860 to 0.1020 per kWh. For consumption above 2,000 kWh, the electric base charge goes up from 0.1270 to 0.1500 per kWh.

For commercial customers using 500 kWh or less, their base rate will go up from $7.67 to $9.06 a month. Those using 500 kWh and above, their base rate goes up from 0.0860 to 0.1020 per kWh; while the government’s base charge goes up from 0.0910 to 0.1070 per kWh.

These electric base rate increases were at the recommendation of both CUC and the commission’s consultant, Georgetown Consulting Group Inc.

Georgetown said the impact of the rate hike on the average residential customer is about a 1.9 percent increase, while commercial and government consumers will bear a 5.1 percent increase.

Commission chair Viola Alepuyo said yesterday that as much as she wants to say no to the rate increase, she has no choice in the matter, considering the justification for the rate hike and the best interest of CUC and the larger community.

CUC chief financial officer Charles Warren and CUC legal counsel Debra Fisher said that CUC badly needs the revenue that will be generated from the base rate hike so that they could do all necessary repairs and maintenance work.

The commission first deferred the base rate hike petition on April 15, 2011, until CUC could resolve its receivables from the CNMI government. It was also then that the commission had approved a 22-percent increase in the LEAC rate, effective April 16.

According to CUC, the two-month delay in the implementation of the new base rate—which was supposed to take effect in April—costs CUC $634,000 in lost revenue.

CUC officials disclosed yesterday that as of April 28, 2011, the government’s unpaid obligation to CUC now amounts to just $4.644 million, comprising 876 individual accounts. This is already a significant reduction compared to the $14.4 million the government owed back in December 2010.

Warren said the reduction was due to the payments made for the accounts of the Public School System and Northern Marianas College.

Of the $4.6 million the government still owes, $3 million represents receivables that are in excess of 45 days. If collected, the base rate component is expected to generate about $837,000 for CUC.

Warren and Fisher said the electric base rate increase will exempt customers who qualify under the agency’s lifeline program. The commission gave CUC until June 15 to create the guidelines for the program.

“We haven’t finalized the program yet but we’re working on it for our low-income customers,” said Fisher, pointing out that only consumers using up to 500 kWh are exempted under the lifeline rate program.

She said that CUC will not place a limit on the number of lifeline members so long as customers qualify for the threshold that will be established.

Georgetown had earlier opposed CUC’s rate hike petition, describing the increase as unnecessary. CUC then filed a rebuttal and managed to convince the commission’s consultant to change its stance after a three-day pre-hearing conference last month.

Yesterday, Georgetown representatives explained the change in its opinion, saying it is for the interest of moving the process forward for CUC.

CUC’s original petition asked for an increase of $8.8 million in electric base rate revenues so it could meet all stipulated requirements and the repairs and maintenance of its power facilities.

Both CUC and Georgetown ended up reducing the requested amount by $5 million, agreeing to just a $3.8 million increase in base rate revenue.

“We believe that [$3.8 million] is reasonable given CUC’s problems and the progress it has made. It’s moving forward in the right way and they need the resources to continue,” said Georgetown yesterday.

Additionally, Georgetown representatives said CUC is under significant scrutiny from the U.S. Environmental Protection Agency because of the stipulated requirements as well as the agency’s efforts in seeking a $16-million loan from the U.S. Department of Agriculture.

“The commission must send a strong message to the financial community that revenue requirements will prevail over other considerations. It is for these reasons that CUC and Georgetown recommended continued support of the proposed $3.8 million [base rate revenue],” said the consultants.