CUC eyes new rates by February

The Commonwealth Utilities Corp. may have a new rate structure within the next three months, if the board of directors grant its approval of the project this week.

CUC executive director Lorraine Babauta said the firm’s management has now completed the draft scope of work and request for proposals for the rate study, which would propose adjustments in electric, water, and wastewater rates.

If the board approves the documents for the bid at its Wednesday meeting, CUC should be able to determine its new rates by February, Babauta said.

“We’re working closely with the [Attorney General’s Office] regarding the planned rate study. We will be hiring a firm to do an assessment of what the rates should actually be. The board will also discuss further how those proposed rates will apply to customers,” Babauta said.

She added that the rate study is part of the agreement CUC signed with the CNMI government in relation to the lawsuit filed by the Department of Finance in April. The government is questioning the legal basis for CUC’s rates, among other things.

CUC chairman Francisco Q. Guerrero said the new rate study will be undertaken to update the 1997 study, which CH2Mhill and Winzler & Kelly Consulting Engineers conducted in line with proposals to privatize the utility firm.

The 1997 study showed that based on the full-cost recovery analysis, residential electric rates would have to be increased by 39 cents.

At present, CUC power rates are 11 cents per kilowatt-hour for residential customers and 16 cents per Kwh for commercial customers.

For areas with 24-hour water service, CUC charges $1 per 1,000 gallons for the first 3,000 gallons; $2.40 per 1,000 gallons for usage of 3,001 to 15,000 gallons; and $3 per 1,000 gallons for usage of over 15,000 gallons.

For areas with less than 24-hour water service, CUC charges 50 cents per 1,000 gallons for the first 3,000 gallons; $1.20 per 1,000 gallons for usage of 3,001 to 15,000 gallons; and $1.50 per 1,000 gallons for usage of over 15,000 gallons.

These rates have been in effect for the past 15 years.

During the CUC board’s regular meeting last August, Babauta said the cost of service and rate design analysis would include a review of CUC’s current financial situation and proposed equitable rates for each of the utility services for each island and class of customer.

She had noted that with its current financial situation and the consecutive increases in fuel price, CUC is heading toward a point where it may be unable to pay basic expenses with its revenues.

The agency, she had added, is starting to exhaust the financial reserves intended for emergency repair and other crises that would threaten the production of power and water on the island.