CUC and energy conservation: A modest proposal

With all this talk of a fuel surcharge fee being implemented by the Commonwealth Utilities Corp., the hand-wringing among public and private energy consumers over the exorbitant bills that will be facing them when the December consumption comes due, the escalating utility bill of the government sector that remains unpaid, and the need to conserve energy, as espoused by the REACh Energy Fair held last Saturday, methink it is high time for the CUC to consider how other countries are handling situations similar to the one it is currently faced with.

A worthy idea that CUC should explore is the concept of pre-paid electricity, which was implemented a year ago on the island where I come from, Leyte. For World War II stalwarts and those steeped in all trivia related to that war, Leyte would surely ring a bell, as it was there that Gen. Douglas MacArthur made landfall on his return to the Philippines, fulfilling his promise that “he shall return.” Anyway, the local electric cooperative has come up with the idea of pre-paid electricity as a means to encourage people to conserve energy, since one will only use the amount of electricity that one can afford to pay for. It works pretty much the same way that your pre-paid cell phones operate but instead of an electric meter, the utility company installs a gadget to the line supplying power to your house. You also get a keypad inside your house connected to this gadget. The gadget—which the utility company buys from India—is a digital device where the amount of power that you have paid for is encoded. It measures your household’s electric power consumption and, when you are about to run out of power credits, it triggers an alarm on the keypad inside your house, signaling that you need to “load up” again. When you go to the utility company to “buy” more power, the company just gives you a PIN number, which you will then encode on the keypad at your house, giving you a fresh load of power credits. Conversely, if you don’t go to the utility company to pay for more power, the gadget automatically cuts off the power supply to your household, rendering your home lightless and you fumbling for your supply of candles and matches.

The advantages of this scheme are immediately apparent and are manifold, particularly in a place like the CNMI. First, it will immediately cut down on the excessive and wasteful use of electricity across a very broad sector of the population. As I said, people will only use the amount of electricity that they can afford to pay for, inserting into the equation the need to conserve power to make sure that their supply would extend to, say, the next payday, when they can afford to re-load their power credits, so to speak. Whether residential or commercial, the onus of conserving energy falls on the costumer, and will have more weight than just an academic understanding of the need for energy conservation as it is directly proportional to how long they will have electricity.

At the same time, people can actually come up with a specific dollar figure on how much they need to budget for a month’s worth of electricity, taking away the need to guess how much their next month’s bill is going to amount to as they will have already paid in advance for the month’s power supply.

Just like pre-paid cell phones, the utility company can also come up with pre-paid power cards that it can distribute at different outlets on the island, so people can actually just go to, say Joeten, and buy a $20 pre-paid power card, to which the PIN number is already affixed. All they have to do is scratch out the card and key in the numbers on the keypad, giving them more power.

Of course this will mean a lowering in the revenue of the CUC in the short run but on the other hand, the agency will do away with delinquent accounts and pending receivables. Electricity is more or less an inelastic demand, which means that, much like food, there is a built-in demand for it, whether people don’t have money or not. People need electricity even for something as basic as light and must come up with the wherewithal to pay for the power needed to turn on the living room lights, so CUC will still have its customer base and will still earn revenue, with the added bonus that they won’t have to wait for people to pay for their last month’s bill under the pre-paid arrangement.

It will also mean that linemen could focus more of their work on maintenance to improve and upgrade the grid system instead of wasting their time on disconnecting delinquent customers or reconnecting power to those who have settled their accounts. Under the pre-paid arrangement, a disconnected customer who has found the money to buy, say $20 worth of power, can just go to any outlets selling power cards, pay up, and then encode the new PIN number, reactivating the power supply to the customer’s house. No need anymore for a lineman to physically go to a customer’s house to reconnect a line.

Best of all, we can all do away with this endless wrangling between the government and the CUC over utility payments. Everybody has gotten tired of this vicious cycle of blame and finger-pointing, with CUC charging the government of being remiss in its payments, the government arguing that CUC has been overcharging it, then turning around and blaming the Legislature for not appropriating the correct amount needed to pay for the bill. Well, all that will be history once CUC implements the pre-paid scheme. If the government wants to make sure that it has electricity throughout the year, then the Legislature has to allocate the amount needed to ensure that that happens. At the same time, the government will only be paying for the actual amount of electricity that it uses and none of this nonsense about a flat rate. CUC, of course, can immediately stop the ballooning amount that it says the government owes it in utility payments. With the government on a pre-paid arrangement, CUC will be assured that it will get its money on time and in full. What’s left to argue about are those bills that remain outstanding before the government went pre-paid.

Of course, critical government agencies such as the hospital, the police, and public schools have to be exempted from the pre-paid arrangement. It wouldn’t do for our surgeons at the Commonwealth Health Center to have the power suddenly cut off while they are in the middle of an operation. Still, pre-paid power will solve a lot of problems and ensure that people will actually make the effort to conserve energy. And that, if for nothing else, is already a worthy end, putting into action what has long been merely lip service about the need to conserve energy and cut down our consumption of fossil fuel.