CUC says power rate cut will jeopardize operations

The Commonwealth Utilities Corporation has not raised power rates for residential and commercial customers for the past 12 years despite increasing operational costs and fuel prices, Executive Director Timothy P. Villagomez said yesterday.

He stressed a legislative proposal to cut the cost of electricity on the island would only burden the government in efforts to maintain utility services in the CNMI as revenues would not be enough to keep CUC operational.

“Here we are trying to survive and trying to get away from government subsidy and (Sen. Edward U. Maratita) is doing that, trying to lower the rates to bring it back to a level where subsidy comes into play again,” Villagomez told in an interview.

“I don’t comprehend that thinking,” he added as he reiterated the position of the utility board against the rate cut which is currently being reviewed by the Senate.

CUC Chairman Juan S. Dela Cruz earlier has warned lawmakers against the plan, calling the legislated rate reduction a “disaster” at a time when the government-owned utility firm is on its way of achieving self-sufficiency and away from heavy subsidy.

Maratita has sponsored a bill which will reduce an average of 25 percent in the power rate charged to CUC customers, from the current 11 cents to nine cents per kilowatt-hour for residential and 16 cents to 11 cents for commercial.

The senator has defended the measure, noting CUC has agreed to lower government power rate from 20 cents to 16 cents — a move that should also be considered for all its customers due to the present economic difficulties.

But utility officials maintained the Legislature-dictated policy would throw CUC back to government subsidy as its financial standing would suffer with lower power rates, a position backed by Gov. Pedro P. Tenorio.

“We haven’t raised our rate (since 1987),” Villagomez explained. “We try to swallow as much as we can… for the last 12 years. There has been no increase in the rates despite increase in fuel prices and operational costs.”

CUC anticipates losses of at least $13 million annually should the proposal go through, the same amount that the island government must raise to keep them operational at its current level.

Observers, however, are skeptic that the bill would drum up enough support from both houses, and it is likely that Tenorio would veto it as he has already expressed his opposition.

“I want to know what’s the real intent of it, ” Villagomez said. “The fact is there are other things that can be worked on and this is one bill, I don’t think, is going anywhere because you are looking at going back to subsidy.”