Another study eyed for new power rates

The Commonwealth Utilities Corporation will conduct another round of rate structure study to determine whether the proposed power rate increase is still viable to finance maintenance of its power grids and other operational costs.

Utility officials disclosed that the Board of Directors has recommended another study and research to support its 10-year rate structure program since recommendations were made back in 1991 when expenses are not as high as today.

The 1991 study was made when economic projection for the CNMI was bright amid the booming tourism industry and a projected construction boom.

Senate Committee on Public Utilities, Transportation, and Communication Chair Thomas P. Villagomez disclosed the board adopted the resolution to commission another study for a new rate structure proposal.

CUC officials have expressed concerns that the proposed power rate increase might not be sufficient to cover all its expenses, including maintenance of five power grids.

The proposed 10-year rate structure which is supposed to be implemented by the CUC will adversely affect Tinian and Rota.

CUC Board Chair Jesus Guerrero and Executive Director Timothy P. Villagomez have outlined the recommended rate hike for both residential and commercial consumers in the CNMI.

Under the recommended rate structure, increases will affect the first and second senatorial districts of Tinian and Rota due to volume of production.

Under the recommended rate structure, increases will affect the first and second senatorial districts of Tinian and Rota due to volume of production.

Saipan’s commercial and residential consumers, on the other hand, respectively face 4.05 cents and 3.19 cents rate increase in their per kilowatt consumption.

Based on the 10-year projection, the power corporation should have jacked up power rates in Rota and Tinian by more than double of Saipan’s proposed new rates.

For Rota’s commercial consumers, CUC will start charging 46.85 center per kilowatt hour from the 1991 rate of 16 cents. This rate should have been implemented last year under the 10-year power rate structure plan.

Residential consumers, on the other hand, should be paying 32.21 cents per kwh for year 2000 from 11 cents in 1991.

Tinian residents will be forced to shoulder an additional 21.45 cents from the 1991 rate of 11 cents while businesses will pay 31.2 increase from its 16 cents per kilowatt consumption.

Saipan, meanwhile, was recommended to shoulder additional 4.05 cents and 3.19 cents for commercial and residential consumers respectively, from 16 cents and 11 cents.

CUC officials said there is a need for the power rate increase to allow other power plants to operate on its own. Saipan has been subsidizing Tinian for the past years which aggravated its current financial status.

The power corporation is hopeful that with the rate increase, CUC will be able to redeem some of its lost revenues especially now that its operational costs had risen to $6.6 million during the early part of FY2001.

Only recently, CUC settled its $3.4 million outstanding debt to Mobil Oil Marianas while payments to other vendors were put on hold due to insufficient accounts.

In the last ten years, power corporation officials said CUC deferred the implementation of the rate hike although the study was completed back in 1991.

But recent developments like bogged down negotiation with Enron and delinquent government bills aggravated CUC’s financial standing. Further, the Legislature is bent at pursuing payments of its outstanding loan with the Commonwealth Development Authority.

Mr. Villagomez said the CNMI should be supportive of the power rate hike implementation to help CUC continue its operations of power plants.

“Saipan should not shoulder all the burden. We should realize that production costs, operations and fuel charges are costly. The local government should realize that they don’t always get what they want,” said the senator.

Further, he assured that proper dissemination of information and the lasting effects of the rate increase should be taken into consideration. The Senate Committee on Public Utilities, Transportation and Communication will help in the educational campaign aspect, he added. (EGA)