‘Govt owes CUC nothing’

The central government pays its bills and does not owe the Commonwealth Utilities Corp. any past billings, said assistant attorney general Justin J. Wolosz in a position paper submitted to the Legislature.

Likewise, Wolosz dismissed arguments that the government’s alleged non-payment is the reason why CUC is imposing the fuel surcharge fee.

“Let me set the record straight: The CNMI pays its electric bill every month….Even now, the CNMI is paying $650,000 per month, which CUC agrees exceeds the government’s monthly electric charges. Any suggestion that that government’s failure to pay its current electric is the cause of the proposed fuel surcharge is simply untrue,” he said.

At the same time, he said it is the administration’s position that the CNMI government does not owe CUC anything for past billings based on “significant problems” that the government has found that call into question the accuracy of CUC’s billings.

“The government was severely overcharged for water and sewer service for the last decade,” Wolosz said.

The CUC claims that the government owes the utility corporation more than $18 million in accumulated utility bills as of last month. The matter is pending litigation now.

Wolosz said the lawsuit, which was initiated by the CNMI government, is not about unwillingness or inability of the government to pay bills.

“To the contrary, the government has paid and continues to pay millions of dollars to CUC each year, which is more than enough to cover its electric bill,” he said.

In the testimony, Wolosz said that the CUC charges a special government rate for water service that is 25 times higher than the commercial rate and 60 times higher for the sewer service. This disparity, he said, is considerable.

For instance, he cited that for fiscal year 2003, CUC billed the government $4.1 million for water and sewer services. If CUC used commercial flat rates, the bill would only amount to $133,000. In other words, he said, CUC overcharged the government by over $3.9 million.

“These rates are unfair and unlawful,” he said.

Further, he said that while the CUC is required to accurately meter and bill CNMI consumers, most government buildings do not have water meters. In its absence, CUC estimates a “flat” amount for water and sewer, resulting in what Wolosz describes as “dramatically inflated” bills.

He cited that for the building that houses the Governor’s Office on Capitol Hill alone, CUC billed the government more than $18,500 a month for water and sewer.

“This is so, despite the fact that this office building has no tubs or showers, is only open during business hours, and even then, water is unavailable during substantial portions of the day,” he said.

Similarly, CUC bills the government more than $11,000 for water and sewer services to the legislative building.

“For these two government buildings alone, CUC is billing the Commonwealth $30,000 per month—for inconsistent and unreliable water and sewer services. And again, this amount is not based on actual usage but based on a CUC estimate,” said Wolosz.

He clarified, though, that CUC’s proposed surcharge fee is not a direct issue in the pending litigation, but if the imposition of the surcharge requires an increase in the government’s monthly payment to CUC for its electric bill, he said the Department of Finance has every intention of endeavoring to do.

He said the administration “regrets the need for a surcharge as it will lead to an increase in everyone’s bill, including the government’s.”

The Legislature held a joint public hearing Tuesday on the proposed fuel surcharge fee in view of the CUC’s goal to impose a fuel surcharge fee of at least $3.5 cents per kilowatt hour beginning next month. By next year, CUC said that customers that consume less than 2,001 kwh per month could be charged up to an additional 2 cents per kwh, bringing the total surcharge fee to 5.5 cents per kwh. For larger users, the additional charge that could be imposed is unlimited, depending on how much fuel prices increase.

CUC currently charges a fixed rate of 16 cents per kwh for commercial and government users and 11 cents for residential users.

At such rate, CUC said that it is left to absorb the fluctuations in fuel prices into its operating budget.