CUC adopts $83M budget

The Commonwealth Utilities Corp. has adopted an $83.29-million budget for fiscal year 2006 based on projections that it would collect $68.17 million in utility revenues and $15.12 million in fuel surcharge fees.

The CUC board of directors approved the budget with a 4-1-1 vote on Wednesday. In that meeting, the utility firm also decided to increase the fuel surcharge rate from 1.5 cents per kwh to the maximum allowed rate of 3.5 cents per kwh starting April.

The utility firm would not have achieved a balanced budget without increasing the fuel surcharge fee.

In the budget summary, CUC management noted that the 3.5-cent fuel surcharge would provide necessary funds to augment utility revenues.

“With the [fuel surcharge fee] projected at $0.035 per kwh, the total projected [fuel surcharge] collections at $15.12 million would barely allow CUC to efficiently carry on its operations,” the corporation noted. “At the least, the increase in fuel prices will not, to a great extent, deplete CUC’s operational funding.”

CUC’s budget allots $69.83 million for general administrative and operational expenses.

Of this amount, $51.56 million is committed solely to production fuel expenses. This represents an increase in the fuel and lube budget by $16.51 million or 46.8 percent over the FY 2005 budget, and by $20.70 million or 66.6 percent over the FY 2004 budget.

Because of the significant rise in fuel and lube costs, CUC said it forcefully reduced its budget for other administrative and operational needs by 6.8 percent and 8.3 percent compared with FY 2005 and FY 2004 budgets, respectively.

For FY 2006, CUC set personnel budget at $13.66 million, a 13.7 percent and 19.3 percent decrease compared with the personnel budgets of FY 2005 and FY 2004 respectively.

Compared with the current fiscal year, the number of full-time CUC employees was reduced by 23—from 401 down to 378 employees.

“This reduction [was made] to the point that operations remain smooth and not hindered,” CUC said.

With fuel and personnel services totaling over $60 million, CUC would have had only $2.95 million left from its utility revenues had the fuel surcharge not been implemented and set at a rate of 3.5 cents per kwh.

“[T]he remaining funds from CUC’s utility revenues of $2.95 million is clearly insufficient to cover the cost of its major operations within the power generation, power distribution, water, and wastewater divisions, and its unavoidable fixed obligations,” CUC said. “For that reason, an immediate source of funding that could improve CUC’s financial burden due to the continued increase in fuel prices is to incorporate into its budget the fuel surcharge.”

Those who voted in favor of the budget were CUC chair Francisco Q. Guerrero, vice chair Herman P. Sablan, secretary Rufina Miles, and board member Laura I. Manglona.

Board member Joe Torres voted “no,” saying he could not support such a huge budget without having exact information about CUC’s complete assets.

Velma Palacios abstained, pointing out that CUC should not simply add the fuel surcharge to balance its budget.

Allen Perez, the only other member of the CUC board, was absent at the meeting.