CUC rejects offer of waiver on govt debt

The Commonwealth Utilities Corp. has rejected a proposal by the Department of Finance to waive the government’s outstanding bills.

Finance Secretary Fermin Atalig made the request on Nov. 12, 2004 in an effort to end the longstanding dispute between CUC and CNMI government over the Commonwealth’s alleged multi-million debt to the utility.

The government has brought the matter to court, claiming that CUC had actually been overcharging the Commonwealth by millions of dollars.

“We certainly respect your right to contest this matter and raise your claims; however, it is CUC’s position that the government, like any other customer, must pay its bills pursuant to the existing rate structure. We cannot, in good faith, waive government bills when we insist on payment from our other customers and disconnect for non-payment,” CUC chair Francisco Q. Guerrero said in a March 22 letter to Atalig.

Guerrero maintained that the issue is best left for the court to resolve. “The board’s position is, and has been over the past year, that we must require the government [to] pay its bills until such time as the court may make a determination to the contrary,” he said.

In his letter, Atalig maintained that it would be “extremely complex” to reach an agreement as to whether the government had been overcharged or had underpaid over the past years.

“All together, this is a tangled web, which will absorb considerable resources of CUC and the government and perhaps, the court to separate, at a time when we all have very limited resources,” Atalig said.

He also noted that neither CUC nor the government is capable to make restitution to the other, no matter which party is found correct in the dispute.

“In fact, no matter which party is found correct, it is the public at large that will bear the ultimate liability,” Atalig said. “So for that reason, I propose that we end this dispute by mutually agreeing to forego any future claim either to recover overcharges or collect underpayments…,” Atalig said.

Guerrero agreed with Atalig that the public will ultimately be called on to absorb the liability regardless of the outcome of the litigation. “However, the CUC board of directors cannot fulfill its fiduciary duties and at the same time agree to your proposal to waive any claim for payment of the delinquent utility billings,” he said.

An unaudited CUC financial report said the government owed the utility firm over $20 million as of the end of January 2005.