…as CUC also mulls electricity rate hike

The Commonwealth Utilities Corp. is currently studying a fuel adjustment charge for its electricity rates.

CUC acting comptroller Ed Williams said this even as he reported to the CUC board Thursday that CUC’s budget for fuel will overshoot by $7 to $8 million this year due to increases in fuel price.

CUC had budgeted $31 million for fuel expenses for fiscal year 2004.

Earlier, Williams projected $35 million to $36 million in expenditures for fuel, or about $5 million above its budget. But last week, he said he has revised his projection upward to the range of $38 million to $39 million.

“This large difference cannot be set-off entirely by reprogramming funds within the budget,” said Williams.

As a result, the utility firm is now looking at the possible implementation of rate adjustments.

“I’m requested that I gather information pertaining to the development and implementation of a fuel adjustment charge for possible inclusion as an add-on to CUC’s rates for electricity,” said Williams.

He said such a plan would be ready early this week.

He reported that operations during the first seven months were normal except for the increase in the cost of diesel, which the CUC uses as fuel for its power plants.

Expenses for fuel rose by about $2.5 million this year compared with the same period last year—an increase of 13 percent over last year’s expenses.

He said that fuel price per gallon remains high. In March, the price was $1.02 per gallon and in April, it rose to $1.05.

Last week, he said that based on the latest Platts Oil Gram price report, the price of fuel bought by CUC cost $1.15 per gallon. The report is the source document for determining the price of fuel each month per CUC’s fuel supply contract with Mobil Marianas.

Williams said that based on the latest news, the price of fuel will remain at $1 or more per gallon for at least the next several months.

In early May, the CUC management floated the idea of imposing a fuel surcharge fee of up to $0.035 per kilowatt due to rising fuel prices.

CUC executive director Lorraine A. Babauta said the fee would permit CUC “to recover increases and to pass on decreases in fuel costs.”

This is done through an adjustment in the customer’s bill if the price of fuel varies from a specific unit cost, she said.

Generally, the fuel surcharge fee is a charge or credit that is applied to each kilowatt-hour of electricity sold, which is computed each month.

CUC cited that Title 4 of the Commonwealth Code, Section 8143 provides that the CUC board shall determine whether to impose a fuel surcharge fee of up to $.0.035 per kilowatt for all consumers of electricity.

The board has not approved this fee yet.