Fuel surcharge regs now in effect

The regulations allowing the Commonwealth Utilities Corp. to assess a fuel surcharge on power consumers are now in effect, but it remains unclear as to when the utility firm will actually implement the new policy.

With the regulations already effective, the CUC may begin assessing a fee of 1.5 cents per kilowatt-hour of power consumed on users anytime it decides to do so.

However, CUC management could not say yet yesterday as to when they will implement it, despite its earlier statement that the surcharge would be included in the March billings. CUC officials said discussions are still ongoing regarding the implementation of the fuel surcharge.

“What they are now discussing is how it will be implemented based on various questions,” according to CUC spokesperson Pamela Mathis, quoting acting executive director Bernard Villagomez.

The final and adopted fuel surcharge policy was published with the AGO’s approval in the Feb. 17, 2005 edition of the Commonwealth Register. The regulations became effective 10 days upon publication.

There were questions raised as to whether or not the March billings, which would pertain to power consumption for the month of February, should reflect a surcharge, when the regulations took effect only before the month ended.

Other questions reaching the CUC include whether or not the utility firm can determine the actual power consumption for the last day or two of February, so that the remaining consumption for the month could be spared from being assessed a fuel surcharge.

The CUC had said that the 1.5-cent surcharge fee equates to approximately 13.6-percent increase in a customer’s electric bill. For instance, a family that had been paying $100 a month for electricity would be billed an additional $13.60 per month for electricity as a result of the fuel surcharge fee. The CUC said, though, that an electric bill including a surcharge fee would state it as a separate item on the bill for customer’s convenience.

The utility firm estimates that the implementation of the fuel surcharge will result in increased revenue by about $500,000 monthly.

CUC comptroller Sohale Somari said the utility firm is still discussing the implementation of the fuel surcharge with the AGO.

In a separate interview, though, assistant attorney general James Livingstone said he was uncertain as to when the CUC would implement the fuel surcharge.

“I am not sure. I read in the newspaper that CUC plans to include the surcharge on March’s bill. I would check with CUC,” Livingstone said via email.

The CUC’s board of directors does not have a scheduled meeting this week.

A media statement released by the CUC last week stated that electric bills that would be sent to customers in March would include a fuel surcharge.

“CUC has been forced by higher fuel prices to pass this additional cost along to its customers. With all customers sharing the burden of higher fuel prices, the impact on each customer is kept to a minimum,” said CUC executive director Lorraine A. Babauta.

According to the media statement, the regulation allows CUC to charge up to 3.5 cents as a fuel surcharge fee for calendar year 2005. However, the CUC board of directors has set the initial level of the fuel surcharge fee at 1.5 cents for all classes of customers, as allowed under the regulation.

“It is important for the public to understand right now that this fuel surcharge, being implemented at 1.5 cents per kilowatt hour, will not solve CUC’s critical and immediate financial problems,” stated comptroller Samari. “CUC anticipate a shortfall of $10 [million] even with the 1.5 cents fuel surcharge fee but expects the shortfall to drop to $5 [million] if the board approves increasing the fuel surcharge fee gradually to 2.5 cents and 3.5 cents in the next four months.”

In calendar year 2004, when the fuel surcharge was proposed but not passed, CUC spent in excess of $10 million over its budgeted fuel cost to pay for fuel. This unanticipated expenditure forced CUC to use all its cash reserves—revenues that were intended for maintenance, repair and replacement of CUC equipment and supplies.