Babauta vetoes surcharge repeal

As expected, Gov. Juan N. Babauta finally vetoed yesterday the bill that aims to repeal the law that authorizes the Commonwealth Utilities Corp. to impose a fuel surcharge fee.

At the same time, the governor said he will reprogram $250,000 for low-income families through the CNMI Low Income Housing Energy Assistance Program “to offset their electric bills.”

In disapproving House Bill 14-343, which aims to repeal the fuel surcharge law—4 CMC section 8143(b)—Babauta said CUC continues to suffer from a financial crisis and to remove the fuel surcharge amid the rising costs of fuel would mean the collapse of the utility agency.

This, despite the infusion of additional funds totaling $15 million to CUC this year, representing government payment (over $10 million) and reprogrammed funds ($5.1 million).

In fact, Babauta said that the projected annual shortfall between the actual cost of fuel and the amount received from the surcharge is more than $12 million.

“This means the reprogrammed funds will be quickly exhausted and CUC will not be able to buy fuel if the fuel surcharge is repealed. When that happens, CUC, the only supplier of electricity in the Commonwealth, will be out of business and the lives of all people in the CNMI will be placed in danger,” said Babauta in his transmittal letter to the Legislature yesterday.

He reiterated that the CUC fuel costs rose by 107 percent—from $0.86 per gallon in October 2003 to $1.78 per gallon in May 2005. CUC buys 3 million gallons of fuel every month.

It was the tremendous increase in the price of fuel, he said, that required the CUC board of directors to use the authority pursuant to 4 CMC section 4135 (b) to impose the fuel surcharge, initially at $.015 per kilowatt hour, then adjusted to $.035 per kilowatt hour. The surcharge represents a 32-percent increase.

“I understand the impact of the fuel surcharge on families; it is painful to me to know that families living paycheck to paycheck must pay more for electricity,” said Babauta.

Therefore, he said, in addition to reprogramming $5.1 million to the CUC Emergency Fuel Contingency Fund, he will also reprogram $250,000 to the Low-Income Housing Energy Assistance Program, which currently provides energy assistance to 594 low-income families. Under the program, recipients get “cash stipend” paid directly to CUC to offset their electrical bills.

“These funds will provide almost 600 qualified families with the financial assistance necessary to offset the financial impact of the fuel surcharge,” said the governor.

In his letter Babauta said that passing H.B. 14-343, as proposed by Vice Speaker Timothy P. Villagomez, means “Commonwealth-wide blackouts, killing our economy and leaving many households without water, lights, refrigeration, and all the other requirements of a decent life that electricity provides.”

He said, “It is the poorer households that the…bill [will] hurt most.”

Babauta said that, if and when the price of oil returns to its previous level, “I will be the first to demand that the current surcharge end.”

“In any case, the people of the Commonwealth are smart enough to understand [that] oil prices have gone up. If we don’t pay for fuel, CUC won’t be able to generate electricity; and we will all be in the dark. As such, I cannot support the repeal of the surcharge and have no choice but to disapprove this measure,” said Babauta.

Earlier, the governor asked the Legislature to appropriate sufficient funds to CUC in order for the fuel surcharge to be repealed. He said yesterday that the Legislature has not done so.

“The failure to act on the proposed solution means that, if the fuel surcharge were repealed, CUC would not have sufficient funds to operate and would be out of business,” he said.

The CUC board implemented the fuel surcharge in March this year, which reflected in the customers’ billings beginning in April.