‘Surcharge rollback possible if…’

If the Legislature will appropriate funds for the Commonwealth Utilities Corp.’s fuel costs, then the administration will be willing to approve the Legislature-approved bill that aims to repeal the fuel surcharge, said Gov. Juan N. Babauta.

He gave the Legislature a July 29 deadline for his decision on House Bill 14-343 and said that lawmakers must insert the necessary amendments to the measure by July 22.

In a letter to the Legislature yesterday, Babauta said he knows the impact of the fuel surcharge fee on power users but he warned that removing it without an alternative would mean the collapse of the local economy.

He said that, with the 3.5-cents surcharge per kilowatt hour, the average household has to pay $1 per day.

“Coming from a family that has little, I understand that even $1 is more than some people can afford. …It is painful to me to know that families living paycheck-to-paycheck must pay more for electricity. But I understand the economic realities of world oil prices and that without reliable electricity the CNMI economy will collapse. We have to maintain our economy or many families will have no paychecks,” said the governor.

Babauta, who is currently in charge of CUC following his May 19 declaration of emergency, said that if the Legislature is really serious in ending the fuel surcharge—as contained in House Bill 14-343—lawmakers can consider the following options:

* appropriate funds totaling some $31 million to let CUC buy fuel to run the power plants in the next 15 months;

* appropriate funds to pay CUC debts; and

* appropriate funds for government utilities.

“If the CUC does decide to appropriate sufficient funding to ensure that CUC can continue to provide electricity for the people of the Commonwealth, then I could support rolling back the surcharge,” said the governor.

He said his administration has taken action, including paying CUC on a regular basis and paying the government’s utility bill in advance, which so far amounts to $3.4 million this year.

For the current fiscal year, he said the government had paid $9.4 million, “almost double the $5 million that the Legislature appropriated for government utilities.”

The governor said that, since his assumption to office in 2002, the government has paid a total of $32.6 million to CUC.

“We are paying what we use,” he said.

Further, Babauta said that he has reprogrammed $5.1 million from various sources into a reserve account to make up for the shortfall between the surcharge and the cost of fuel. He said the reserve fund might cover another five months of fuel.

“This means that the government is not only paying its own bill; it is also paying part of the bill for every other consumer—rich or poor,” he said.

He said the fuel surcharges gives CUC $1.4 million a month, which is $1 million short of CUC’s fuel needs.

He cited that CUC used to pay .86 cents per gallon of fuel in October 2003. In May this year, the payment rose to $1.78 per gallon.

“This is a 107-percent increase. The surcharge is [only] a 32-percent increase,” he said.

The CUC recently signed a $120-million contract with Mobil for a two-year supply of fuel.

In his letter, Babauta said that if the bill, authored by Vice Speaker Timothy Villagomez, is signed, it would mean that the reprogrammed funds would be quickly exhausted “and CUC will not be able to buy fuel.”

“When that happens, CUC, the only supplier of electricity in the Commonwealth, will go out of business and the lives of all people in the CNMI will be placed in danger,” Babauta said.

Babauta noted that Villagomez, as executive director of CUC, had pushed for “full cost recovery” and an end to legislative interference.

“Now, he proposes that the Legislature block even ‘partial cost’ recovery. If we follow his lead, we will have Commonwealth-wide blackouts, killing our economy and leaving many households without water, lights, refrigeration, and all the other requirements for a decent life that electricity provides,” said the governor.

He said it is the “poorer households that the Villagomez bill will hurt the most,” noting that those who can afford it will buy their own generators.

When reached, Villagomez said that he has not read the governor’s letter.

Speaker Benigno R. Fitial’s office, meantime, said that the current problem is just “part of the pattern of the Babauta’s mismanagement in the past three and a half years.”

House leadership spokesman Charles Reyes Jr. said that Babauta is “throwing” the responsibility to the Legislature.

“He is the chief executive. He has the authority to reprogram funds. He has lots of discretionary funds at his disposal. What’s he’s doing now is pass[ing] this responsibility to the Legislature,” he said.