CUC owes over $10M in OPA fees, agrees to offset CNMI gov’t utility arrears

The Commonwealth Utilities Corp. owes the CNMI government over $10 million for failure to pay its annual 1% Office of the Public Auditor fee dating back to 2022. As a result, CUC has agreed to offset the central government’s utility arrears of $10.9 million.

During CUC’s monthly board meeting yesterday, Gov. Arnold I. Palacios and Department of Finance Secretary Tracy Norita met with CUC’s board members for a constructive conversation on how CUC and the central government can help each other in terms of unpaid receivables and fees.

In an interview with CUC chief financial officer Betty Terlaje, she explained that while the central government has struggled to make payments toward its utility arrears for the past few years, CUC too has held back on paying its required 1% OPA fee as it struggles to collect arrears from government agencies.

“The central government is struggling with its finances with the economy down and they have got bills to pay. The Governor, in February, made a commitment to the court that they would be paying their bills moving forward but they have been struggling to make ends meet. Although they’ve made good effort to reconcile, they’re currently behind three or four months of utility payments. On the other hand, CUC has held back on paying their 1% OPA fee because we aren’t collecting from other agencies. We haven’t paid it because we’re struggling to collect, and we need all our funding to keep our services going.

With both parties struggling, Terlaje said they have agreed to offset arrears on the understanding that the central government offsets its unpaid OPA fees.

“Last year, we started to pay our OPA fee and OPA asked if we could reconcile on the previous amounts. We told the government that we will work with them to reconcile it. We have come to an agreement with the government to offset what they owe us (as of today they owe us $10.9 million) and we know we owe them more than that. We are still reconciling that. So, we’ve agreed to offset $10.9 million of their receivable,” she said.

Terlaje said CUC will have to report this agreement to the U.S. Environmental Protection Agency and U.S. District Court Judge David Carter.

“We also have EPA and the Department of Justice on our back about collecting what’s owed to CUC so we can fund the projects that we need to get going. When we report back to EPA, we have to tell them we’ve settled on the receivables for the government,” she said.

In a statement from Norita, she said CUC owes the central government more than $10 million in OPA fees but that is still under reconciliation.

“Right now, we’re just proposing a solution that could be brought to Judge Carter as our mutual solution to the to the arrears. So right now, we’re going to follow the FY 2022 CUC audit which at least gives us a baseline of $10 million to work with while they reconcile the remaining, which could be up to $17 million that CUC owes the central government. At this time, we’re following the FY22 audit just to have something in place and considered by the board to address our arrears, which is the central government’s arrears,” she said.

Norita added that once the board officially agrees to the proposal, a memorandum of agreement will be signed.

“Right now, we agree that they’ll consider. The board needs to discuss and vote on it, so should they agree with how we proposed to approach this issue, then there will be a document like a memorandum of agreement to memorialize it,” she said.

Norita explained every agency must pay a 1% OPA fee that must be paid to OPA. If it’s not paid within the fiscal year, any remaining amount that was not paid gets paid to the central government’s general fund.

“So, this is years and years of accumulated OPA fees that were never remitted to the central government. So, we’re using this as an offset on both liabilities that we on our side and they owe on their side. We are going to be working on a reconciliation back to 2003.