Palacios signs bill allowing CHCC to pay commercial rates

Gov. Arnold I. Palacios has signed into law Senate Bill 23-37 Senate Draft 1 House Draft 1, which essentially mandates that the Commonwealth Utilities Corp. start charging the Commonwealth Healthcare Corp. commercial rates instead of government rates.

Last Monday, Palacios wrote a letter to Senate President Edith Deleon Guerrero (D-Saipan) and House Speaker Edmund Villagomez (Ind-Saipan) informing them that he has signed into law S.B. 23-37 SD1, HD1 which essentially mandates CUC to change the water, power, and wastewater rate for CHCC to commercial rates.

Essentially, commercial rates are much lower than government rates allowing CHCC to pay lower costs is utilities.

The Senate Bill is now Public Law 23-30.

Previously CUC expressed concerns about this bill saying that the passage of Senate Bill 23-37, which would essentially allow CHCC to pay commercial rates instead of government rates, will financially impact everyone as the difference will have to be absorbed by other accounts.

During a special board meeting last month, CUC chief financial officer Betty Terlaje shared that should the bill become law, it will directly impact other consumers as the difference will have to be absorbed by other rate payers.

“Based on the last three fiscal years’ average that we charge CHCC, the variants between the two is $2.8 million. That $2.8 million will have to be distributed elsewhere to be able to capture the cost of services we’re providing CHCC. The bill has been passed to the governor and the governor has informed CUC that it awaits it comments,” she said.

Fortunately, Terlaje said the impact is lessened thanks to amendments made by the House.

“My understanding is the House made amendments to the Senate’s version of the bill which is to change the rate classification of the CHCC from government to commercial rate. The House made amendments in our favor, so we’re grateful for that, that the application of the change is not retroactive until 2011. So, the impact has significantly reduced compared to the Senate’s version,” she said.

CUC board members raised concerns about this impact and are opposed to the bill’s passage until a cost service study is done to determine exactly what it costs to service CUC so that other rate payers are not affected.

CUC will be doing cost service studies in the next week with the help of subject matter experts to determine how much it really costs to serve commercial accounts and government accounts and establish an update rate structure that will be brought before the CPUC.

Gov. Arnold I. Palacios