Higher fuel surcharge in ’05

The Commonwealth Utilities Corp. admitted on Wednesday that the proposed 3.5-cent fuel surcharge, if adopted in December, could be at least 5.5 cents per kilowatt-hour by January 2005.

During Wednesday night’s sparsely attended public hearing at the Multi-Purpose Center, acting CUC comptroller Ed Williams said all electric customers will be charged an additional 3.5 cents per kwh in December.

In calendar year 2005, customers that consume less than 2001 kwh per month could be charged up to an additional 2 cents per kwh or a total of 5.5 cents per kwh.

For larger users, the additional charge that could be imposed is unlimited, depending on how much fuel prices increase.

Williams said he does not foresee the price of crude oil and of the resulting diesel oil, which CUC uses for its power plants, going down. Therefore, the minimum 2-cent additional charge by January is almost definite.

One of the CUC customers present at the public hearing accused CUC of misleading the public. He pointed that contrary to what CUC has been telling the people, the proposed 3.5-cent fuel surcharge would actually be effective for only 24 days—from the Dec. 7 implementation date targeted by CUC until the end of 2004.

In response, Williams said CUC did not intend to make it so. He explained that the fuel surcharge proposal was brought up by the CUC board of directors as early as March this year. However, because the board required a thorough study of the plan before approving it, the proposal was not presented to the public until now.

“We wanted it implemented at least by September. We didn’t plan for it to be implemented just before the end of the year. That’s just the way it worked out,” Williams said.

Held from 7pm to 10pm Wednesday, the three-hour public hearing provided venue for questions, comments, and objections from the less than 50 participants.

Former senator Ramon “Kumoi” Guerrero, who was among the crowd, reprimanded CUC for conducting the public hearing after the fuel surcharge had been approved by the board. He said this move made the conduct of the public hearing “rather awkward” and “meaningless.”

Guerrero also urged CUC to present exact information to the people on how much it costs to generate power for each island. He said consumers, particularly Saipan residents, have the right to know how much of their bill is used to subsidize Tinian and Rota residents.

Further, the ex-senator raised concern that the imposition of a fuel surcharge might drive businesses and other consumers to generate their own power. “Instead of receiving more money to pay for fuel, you might lose revenue instead,” he said.

Far East Broadcasting Company, the biggest residential/nonprofit customer, asked CUC to consider the hardship the fuel surcharge will present to non-profit organizations.

Company executive director David Creel noted that electricity is the single largest expense of his organization, which operates a religious shortwave radio station in Marpi.

“If the proposed 3.5 cent fuel surcharge fee is implemented, our electric bill will increase by about $5,000. Starting in January of 2005, it could be much more since an additional increase is proposed at that time. For a nonprofit organization which operates on contributions, this is a very difficult cost to absorb. We quite simply do not have an extra $5,000 per month,” Creel said.

He added that it is especially difficult to plan for such an increase on such short notice.

“If CUC board decides that this fuel surcharge fee is indeed necessary, I respectfully ask that it be delayed for at least six months to give businesses, non-profit organizations, and individual consumers a chance to try to find ways to pay for this increase in expenses. Perhaps a ‘phased-in’ approach would be appropriate,” Creel said.

A number of other participants urged CUC to look at lowering the adjustment rate, be more aggressive in collecting from delinquent customers, and find ways to save money on operations.