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SCC’s Sablan praises rejection of surcharge
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Posted on Feb 08 2005
Gov. Juan N. Babauta’s move to reject the proposed fuel surcharge has earned the approval of the business sector.
“The governor did the right thing,” said Saipan Chamber of Commerce president Alex Sablan. “He correctly pointed out that the Commonwealth Utilities Corp. is mandated by a partnership agreement with the federal government that require CUC to adhere to business practices.”
Babauta, in a letter explaining his decision to CUC, had noted that the utility firm may have violated the terms of its 1995 partnership agreement with the U.S. Department of Interior by failing to submit a final financial audit statement and rate study to justify the proposed fuel surcharge.
Babauta had said information from the audit statement and rate study are necessary to identify the actual costs of producing 1 kwh of electricity and to establish the amount of fuel surcharge to be implemented.
Sablan also reiterated that, instead of continuing to push for the fuel surcharge, CUC should pursue the privatization of the Lower Base power plants and other means to save money.
“They could save $20 million a year if they convert the power plant to burning both heavy fuel and low-sulfur automotive diesel oil, and another $15 million if they would just increase the power output by getting all of the engines up and running,” he said.
Babauta disapproved on Monday the proposed emergency regulation authorizing CUC to assess a 1.5-cent fuel surcharge fee for all utility customers.
He cited two main reasons for his rejection of the measure: lack of accurate analysis by the Commonwealth Utilities Corp. of the actual cost it incurs in producing electricity; and failure of the utility firm to implement effective cost-savings measures.
