Govt blamed for CUC’s dire straits

The Commonwealth Utilities Corp. has cited the government’s non-payment of bills as the reason why the rising cost of fuel must be passed on to customers.

During the autonomous agency’s meeting yesterday, CUC comptroller Sohale Samari stressed the urgent need for the imposition of a fuel adjustment charge.

He noted that as of Aug. 20, CUC has total collections of $60 million. This means that the corporation has an average collection of $275,000 a day. But because of the consecutive fuel price increases, CUC now spends over $280,000 for its daily operations.

CUC expenses increased by $3.6million for fuel, Samari said.

“The fuel surcharge is important. If the board does not pass it, our [certificates of deposit] could get completely wiped out in four to six months. This surcharge will not even give us additional money. All of it is going to go to Mobil. It will just keep us at break even point,” Samari told the CUC board.

He maintained that the CUC would have enough money to cushion the impact of the fuel price hikes—if the government pays the $17.9 million it owes the corporation. He noted, though, that this is not likely right now, given the government’s financial problems.

The governor’s financial advisors, he added, have recommended the adjustment charge.

“Either the government pays, or the cost of fuel is passed on to the public,” CUC chair Francisco Q. Guerrero said, echoing Samari’s statement.

Board vice chair Herman Sablan added: “This is an unpopular move, but it must be done. For 16 years, the government has been subsidizing the consumers. Now, we have to do our share so we could continue to have power. Unfortunately, it has to happen at this time [when the cost of everything else is also rising]. But we have to do it. Something has got to give.”

Samari stressed that CUC will stop the fuel surcharge once fuel prices go down. “The adjustment charge is not engraved in stone. It’s just a temporary solution to the problem that we have.”

The idea of imposing a fuel surcharge of up to 35 cents per kilowatt-hour was first brought up by the CUC management in early May.

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

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.

Former governor Froilan Tenorio, who attended yesterday’s board meeting, expressed strong opposition to the plan. He maintained that the public should not be made to suffer for the government’s failure to settle its debts.

“There’s no way that the public will pay additional charges until you collect what the government owes you. I got a disconnection notice because I was not able to pay my bills. Nothing in the statute distinguishes the government as a special customer,” Tenorio said. “I’m going to be involved in the next election. I will advise the next governor not to find money to pay Babauta’s debts. I’m trying to save your neck here. You are liable [for the government’s non-payment] because there’s a means for you to force the government to pay.”

CUC earlier issued a disconnection notice against the government. But the court issued an order that prevented CUC from conducting widespread disconnection of utility services to government departments and agencies that have not settled their bills on time.

Samari’s financial report also showed that, as of June 30, 2004, CUC had an operating loss of about $2.5 million and an overall net loss of over $10 million. In the first nine months of the previous fiscal year, CUC had an operating loss of over $347,000 and a net loss of over $5.5 million.

During the first nine months of FY 2004, CUC revenues increased overall by over $2.5 million, or 5 percent. Revenues increased by over $1.2 million for power, over $1.1 million for water, and over $44,000 for sewer.

The increases in power and sewer revenues are due primarily to the addition of new residential and commercial customers. Increase in water revenues is due to billing adjustments.

Aside from the 14-percent hike in production fuel costs, CUC expenses increased by over $603,000 for maintenance, and by over $1 million for other production, when compared with expenses for the same period in FY2003.

At present, CUC charges residential customers 11 cents per kwh and commercial customers 16 cents per kwh.