CUC rate study update may now proceed

A new study on the rate structure of the Commonwealth Utilities Corp. may be in the offing, with the Water Task Force reiterating the need to update the rate structure to assist the agency in cost recovery.

Water Task Force chair Diego T. Benavente disclosed Friday that, with the approval of the $5.2 million spending plan for Saipan’s water project, funding for technical assistance to update the CUC’s rate study that was developed a few years ago was also provided.

Benavente said it is very important that the rate study be updated to determine the appropriate rate for water use.

“If we are to seek alternative financing, we need to assure potential private investors that CUC maintains a steady and adequate revenue stream for debt service. This is the first step toward full cost recovery and alternative financing if we are to work toward potable water,” said the task force chair.

Deputy Assistant Secretary for the Interior David B. Cohen had approved last week the $5.2 million spending plan submitted by the task force to the Office of Insular Affairs. The project package was submitted three weeks ago and delineated where and how the fiscal year 2004 CIP grant will be spent.

“This phase of the process enables the Water Task Force and the CUC to execute various A&E and construction contracts,” said Benavente.

The approval also allows the task force and the CUC to optimize wells at the Sablan Quarry, Agak, Gualo Rai, Calhoun, Capitol Hill, and As Matuis well fields. The program intends to increase water quality and efficiency of the wells, as well as protect groundwater resources.

“Funding for this program also allows the task force and the CUC to purchase various equipment and supplies needed for the new well rig that is presently being manufactured in Pittsburg and is expected to arrive in November,” said the task force chair.

Benavente said the CNMI is fortunate that Cohen is well versed in the task force’s mission and strongly supports the project.

“He understands the significance of Saipan being the only U.S. territory where residents do not have access to potable water. His commitment and support for the project allows us to improve the water situation in accordance with our Plan of Action. We will continue to work with his office to maintain the coordinated efforts of federal and local agencies,” said Benavente.

With the approval of the grant, the task force and the CUC will be able to implement the recommendations of the Water Infrastructure Report developed by the U.S. Army Corps of Engineers.

At present, the task force and CUC are developing the grant package for FY2005 to address funding for Phase II of the project. When the first seven recommendations are fully funded and completed, the task force and the CUC anticipate 24-hour system pressurization for Saipan.