Personal comments on proposed CUC surcharge fee

I write this letter to publicly ask the Commonwealth Utilities Corporation to reconsider the imposition of the fuel surcharge fee.

Before I begin, I would like to state that my comments are my own, and are not made on behalf of any of my colleagues in the Senate or on behalf of anyone else in the government. I am aware that, as a senator, I must choose my words carefully, as it is not always a good idea to make comments in the press about ongoing intra-governmental disputes. However, I am a resident of Tinian and a citizen of the Commonwealth and therefore I am entitled to comment about my personal opinions.

It seems there can be no doubt that the people of the Commonwealth strongly disagree with the surcharge in its current amount at this time. While most realize that some increase in rates will be necessary, many object to the way in which CUC plans to implement the surcharge.

Recently, a joint public hearing was held in the House Chamber. While CUC promised to consider the public’s opinions, I was left with the impression that CUC still plans to implement the surcharge on the anniversary of the Day of Infamy, Dec. 7. My suspicions seem confirmed now that CUC has stated in the media that it still plans to go ahead with the surcharge, notwithstanding the public’s input.

A very interesting point was raised at the hearing by a citizen, who seem to think that CUC does not have the legal authority to impose a surcharge at this time. I have done a bit of research on the issue, and feel that the citizen may in fact be correct.

Title 4, section 8143(b) reads: Electrical power charges. The board shall determine whether to impose as of October 1, 1985, a fuel surcharge fee of up to $.035 per kilowatt hour for all consumers of electricity. Once imposed, the board may annually adjust the fuel surcharge fee to reflect the total costs of purchasing fuel for the production of electricity; provided, that the fuel surcharge fee shall not increase for consumers of less than 2001 kilowatt hours per month at a rate of more than $0.02 per kilowatt hour per calendar year.

As the citizen astutely pointed out, a plain reading of the statute implies that, if CUC were to have the power to impose fuel surcharges, it should have done so by October, 1985. Apparently, CUC did not; thus, a very convincing argument could be made that CUC does not have the authority to impose surcharges at this point in time, and if it wishes to impose surcharges, CUC must come to the Legislature and ask for the authority to do so.

I wonder, then, why the Legislature would have granted CUC a conditional authority (“use it or lose it”) to impose surcharges. The legislative history sadly does not definitely answer that question, as the records from back then are incomplete. There are, however, documents, which seem to indicate that the preference was for CUC to impose increases in rates, rather than surcharges. For example, a document discussing Saipan Electric Power Authority is in the folder, which contains the legislative history of the bill that created CUC.

The following statements are found: “Rates should be raised to about 6 cents per KWH in FY 1980 and to 7 or 8 cents per KHW in FY 1992, depending on future increases in oil prices” and “The user rate structure should be reviewed every year, and a rising oil price must be passed on to consumers by an automatic adjustment in the rate structure.”

It is clear that, back then, the preferred method was to increase rates rather than slapping on surcharges. That preference could explain why the Legislature put a time limit on CUC’s authority to impose a fuel surcharge.

In its power point presentation to the Legislature, CUC made reference to 4 CMC 8143(b) but curiously forgot to include the portion of the statue which calls its authority to implement a surcharge into question. I am concerned that CUC may be unaware that the legal status of the fuel surcharge could be called into question and this may end up in court. I feel that protracted and costly litigation should be avoided at all costs; perhaps CUC should seek help from the Legislature before it imposes this surcharge.

Finally, I was struck by something else: Black’s Law Dictionary contains an interesting definition of “surcharge” which seems appropriate, given the legal uncertainty surrounding CUC’s proposed actions. “Surcharge, n. An overcharge; an exaction, impost or encumbrance beyond what is just and right, or beyond one’s authority or power.”

Once again, I ask CUC to reconsider its proposed course of action. If there is no other avenue for CUC to survive the surging price of fuel, and it becomes apparent that rate increases will not be possible in the immediate future, I will be more than happy to introduce legislation upon request to make possible a staggered increase for a fuel surcharge fee.

Joseph M. Mendiola
Senator