Legislature calls for public hearing on fuel surcharge

The Legislature will be holding a joint public hearing Monday on the proposed fuel surcharge fee, following admission by the Commonwealth Utilities Corp. that the fee would reach a high of nearly 6 cents per kilowatt-hour by next year.

“It turns out that the increase is higher than the previously announced rate,” said House leadership spokesman Charles Reyes Jr.

In a memorandum issued yesterday, House Committee on Public Utilities, Transportation, and Communications chair Rep. Timothy Villagomez and Senate PUTC Committee chair Diego M. Songao called on CUC board chair Francisco Q. Guerrero and CUC executive director Lorraine A. Babauta to come to a joint legislative meeting at 1:30pm Monday.

The CUC had said that it would implement a $3.5 cent surcharge per kwh by next month in view of the price increases of fuel worldwide. However, in a public hearing held Wednesday, CUC said the surcharge could reach $5.5 cents by January 2005.

Reyes said the Legislature’s decision to hold a separate hearing on the issue is in “response” to public clamor.

“Even with the 3.5 cents, people have voiced out their opposition. Members of the community have expressed their concern and the Legislature is seeing the sentiment, so it’s responding,” said Reyes.

He said the Legislature aims to get the side of CUC officials and seek alternative means to address the situation without resorting to the fuel surcharge.

“They want to understand the problem so they’re inviting key people to the meeting. The legislators believe that any price increase is the absolute last resort,” he said.

Reyes said the Legislature also invited Finance Secretary Fermin Atalig to the hearing to shed light on the government’s inability to pay off utility bills.

The CUC had said that drastic measures, including the surcharge fee, have to be made in view of its failure to collect payment from the central government. The CNMI government has over $18 million in accumulated outstanding debt owed to CUC.

This issue, however, may boil down to the Legislature’s failure to appropriate enough funding for utilities payment. Based on the 2003 budget, the Legislature identified only about $5 million to pay for CUC bills.

In the proposed 2005 budget, the House allocated only $4 million for utilities but the Senate restored it to the present level of $5 million.

Reyes said that CUC’s recent pay increase to its employees may also be a factor in the imposition of the surcharge fee.

“With the austerity measures in place, CUC raised some salary of its personnel. It may be a contributing factor,” said Reyes. “The board is always in conflict, too. So maybe it’s a factor.”

During Wednesday night’s public hearing at the Multi-Purpose Center, acting CUC comptroller Ed Williams said all electric customers will be charged an additional 3.5 cents per kwh in December.

In calendar year 2005, customers that consume less than 2,001 kwh per month could be charged up to an additional 2 cents per kwh or a total of 5.5 cents per kwh.

For larger users, the additional charge that could be imposed is unlimited, depending on how much fuel prices increase.