Utility debt settlement with central govt nears

The over $2 million the central government owes the Commonwealth Utilities Corp. is expected to be resolved soon following disclosure that the Executive Branch has promised to pay its debt as soon as it completes an accounting of its current arrears.

Commonwealth Utilities Corp. board chair David J. Sablan told the board last week that based on his latest meeting with the central government, some funds have already been identified to pay for its debt with CUC.

“They’ve been very committed in giving us around $2 million. [And] they have $1.3 million available and ready,” he said, adding that the Executive Branch is still looking for ways to find the additional $700,000.

Sablan reiterated his position that he is confident in the commitment expressed by the Inos administration, which he said also wants to ensure that CUC will have money to pay for its fuel supply.

CUC chief financial officer Charles Warren disclosed that the central government is “more or less” current in its monthly bill payment.
Last week, CUC board chair David J. Sablan also met with State Board of Education chair Herman T. Guerrero on the public schools’ unpaid obligations.

Sablan described the meeting as very cordial and straight to the point.

“It was a more cordial meeting. They fully recognized their debts [with] us. They say they remain current [on their monthly bills] and they are committed to stay current,” said Sablan.

It will be recalled that BOE’s Guerrero, after receiving CUC’s demand letter that set 15 days for PSS to come up with a realistic plan to settle its arrears, sought a 45-day extension on that deadline. Sablan had been unwilling to grant this. The two later met last week.

At their May 6 meeting, Sablan said that Guerrero explained the need to wait for the Legislature’s action on the PSS budget for fiscal year 2015 in order to come up with an amount that should be paid to CUC.

Sablan said that Guerrero also informed him that the BOE recently passed a resolution to dedicate a portion of the MOE it expects to receive from the central government to pay its CUC bills. MOE stands for maintenance of effort that requires the government to give PSS specific amount in exchange for the $44 million in ARRA funds awarded the CNMI in 2009. The MOE share, amounting to $6 million, has yet been addressed by the central government.

Sablan said that Guerrero asked for PSS to be given until June to come up with the realistic payment plan, or until something happens on the proposed school budget and MOE issue.

Sablan also lauded PSS’ conservation plan to bring down its utility costs.

CUC executive director Alan Fletcher confirmed that since this conservation plan for schools was enforced, “their usage went down by over 20 percent in the last couple of years.”

The total past due balance owed by PSS to CUC is $7,184,581. This represents the principal amount owed for electrical, water, and wastewater services in the amount of $6.34 million and accrued late charges of $807,558. Late charges continue to accrue on the accounts at the rate of 1 percent per month pursuant to CUC regulations.

This receivable from PSS accounts for 31 percent of CUC’s total receivables from government customers.
CUC has already filed a suit to collect on PSS’ arrears. Initial settlement negotiations were initiated but were stalled pending the approval of the 2015 budget for PSS.