FSF to bite into family budgets

Commonwealth residents may have to forego the traditional Christmas lights this December, as they face an almost certain implementation of a 3.5-cent fuel surcharge next month and an additional 2 cents per kwh by January.

This early, Saipan households are planning to cut down on power consumption, in the hope of lessening the impact of the fuel surcharge on their budget.

Businesses, on the other hand, are bracing for tougher times ahead. They note that passing on increases in operation costs to customers may actually hurt their business, rather than help them weather the crisis.

Under the fuel surcharge regulations, as proposed by the Commonwealth Utilities Corp., a residential customer currently paying $100 a month will be billed $32 more for the same amount of electricity in December. For the same usage in January, that customer will be charged $150.

San Vicente resident Rose Fejeran’s utility bill for the month of October costs about $80. If the proposed fuel surcharge passes, she will be charged $105 in her December bill and $120 in her January bill for the same power consumption.

Merlie Aguilar, a private sector employee, said she is paying an average of $70 per month for electricity, at its current rate of 11 cents per kwh.

Aguilar said she and her husband are now identifying items they can delete from their tight budget in order to produce the extra $22 they will have to pay CUC in January 2005 (representing December consumption). She will have to do further belt-tightening by February, when her electrical bill for January is expected to reach $105.

Interviewed separately, Fejeran and Aguilar said they have no option but to be more stringent in budgeting their family income. They also plan to reduce their power consumption by using the air-conditioner less frequently and turning off lights when a room is empty.

“The additional money I’ll be paying to CUC is enough to buy my baby a whole month’s supply of milk. It’s really going to have a big impact on our budget, especially when the cost of other consumer goods start to increase,” Aguilar said. “But it appears we don’t have the power to stop CUC from implementing the fuel surcharge. I don’t know where we are going to find the additional money to pay for this.”

For their part, commercial and government customers are facing an initial increase of 3.5 cents to their current rate of 16 cents per kwh. Those consuming more than 2,001 kwh per month, however, face unlimited hikes by January.

If the fuel surcharge pushes through, Tasi Tours would be paying over $500 more for power consumed in December at its Oleai and Sadog Tasi offices come January. Currently, Tasi Tours has an average electrical bill of $2,500 and consumption of over 15,000 kwh a month.

At the minimum, Tasi Tours will pay $3,360 by February, when additional adjustments are implemented in the January billing.

But because each of its offices consumes an estimated average of 7,500 kwh a month—or way above the 2,001-kwh threshold set in the proposed regulations—Tasi Tours will face unlimited fuel surcharge hikes starting February 2005.

Michio Takahashi, Tasi Tours general manager for administration and accounting, said the fuel surcharge will cause additional burden to the company, which is now experiencing loss because of the series of fuel price hikes.

But Takahashi said Tasi Tours has no choice but to absorb the increased expenses, as the company cannot increase its rates without turning away customers.

The same goes for Saipan Ocean View Hotel in Garapan.

Hotel president Linda Yeung, who refused to make public the company’s current power bills, said she will be paying “an extra few thousand dollars every month” once the fuel surcharge is implemented.

She said this is a big increase for the hotel to try to absorb, since the company makes little profit as compared with larger hotels on island.

Nevertheless, Yeung said she will try to see for a while how the fuel surcharge will impact her business before she makes any decisions. She added that she might consider raising room rates, but not reducing services to guests.

She noted, however, that a rate increase cannot be implemented immediately. Only last May, the hotel raised the price of its rooms from $55 to $60.50 per night.

“We are in the tourism business and we have to maintain quality customer service. We cannot ask our guests to turn off their aircon or something like that. We have to keep the level of service very high,” she said.

For its part, the Saipan Mayor’s Office expects more CUC customers to apply for the utility assistance program when the fuel surcharge is implemented. The assistance is provided to Saipan residents with outstanding utility bills. Funds from this program cover only one month’s bill per calendar year.

Mayor Juan B. Tudela reported that as of yesterday, his office has distributed a total of $23,000 of assistance to 129 Saipan residents. This year’s figure is expected to surpass the $25,600 distributed to 139 residents last year.

“The fuel surcharge will surely have a domino effect,” Tudela said.