‘Fuel surcharge law needed’

The Legislature may have acted in haste in approving a bill repealing the fuel surcharge fee, said House minority leader Arnold I. Palacios yesterday, noting that in emergency situations like the current power crisis, a constitutional provision for the fuel surcharge fee is necessary.

“There’s no denying that we voted for the repeal but maybe the Legislature acted in haste. If you look at the provision of the law, 4 CMC Section8148 (b), that’s what it is for: in case the Commonwealth can no longer afford fuel cost. That’s why it’s there. The law gives us this flexibility to impose FSF and get at least half of the fuel cost,” said Palacios.

Gov. Juan N. Babauta had written the Legislature on Monday, asking the lawmakers to find funds for the Commonwealth Utilities Corp. if they want to repeal the fuel surcharge provision.

The governor justified in his letter that the fuel surcharge is needed at this time to partially recover CUC’s fuel cost, citing that prices of oil have increased 100 percent since over a year ago.

CUC’s fuel cost rose from $30 million in late 2003 to $60 million this year.

In his letter, the governor said that the central government has paid over $9 million to CUC so far this year, including a $3.4 million advance payment to the utility firm.

Since 2002, he said the government has paid $32.6 million to CUC.

In view of the current state of emergency, he said he recently reprogrammed over $5 million for CUC.

The fuel surcharge at 3.5 cents per kilowatt hour, he said, brings $1.4 million to CUC a month, which is still $1 million short of CUC’s fuel needs.

The governor said that if the fuel surcharge is repealed, the Legislature should first guarantee that it can appropriate $31 million for CUC in the next 15 months to avoid disruption in the fuel supply.

He also asked the lawmakers to appropriate funds to pay the government’s outstanding debt with CUC, which the utility firm claims to be $20 million. This is under litigation following protests from the central government.

At the same time, the governor is asking the Legislature to appropriate funds for government utilities.

Under the continuing resolution, the government is allotted only $5 million for utilities.

“Inasmuch as we want the fuel surcharge fee to disappear, the reality of oil prices is such that we really must be prudent and face this. The choice now is whether we want to experience Commonwealth-wide blackouts or partially cover the fuel cost through this fuel surcharge. I know it’s a hard reality but we’ve got to face it,” said Palacios.

He said the Legislature may be able to find some funding for CUC if priorities are changed.

“If we go that way, we can identify funds, of course we can, but we need to change a lot of priorities. The question is, do we have the political will to switch funds from a priority program to CUC? Well, I believe that power generation is of utmost priority so I’m willing to sit down with my colleagues and the Executive Branch to collectively address this issue,” said Palacios.

House majority leader Oscar M. Babauta said there is just no money to give CUC.

“We could identify funds if we have enough money but right now, I don’t think we have enough resources to continue operating,” said Rep. Babauta.

He said that if the administration can identify which funds to appropriate, then the Legislature would do it.

Rep. Babauta echoed the House leadership’s earlier statement that it is the governor’s responsibility to reprogram funds during the power emergency.

“He [governor] has the authority. He can reprogram funds but I again question the motive of the emergency declaration because it is due to CUC financial crisis and the inability of CUC to execute a contract with Mobil,” said Rep. Babauta.

Sen. Joseph M. Mendiola, chair of the Committee on Fiscal Affairs, meantime said that the government cannot subsidize CUC.

“There’s no way the government can do that. That’s too much,” he said.

Mendiola, who earlier abstained from voting on the fuel surcharge fee, said that while he wants to get rid of the fee, he knows that there is no alternative to solve the problem.

He earlier said that removing the fuel surcharge would only address the consumer side of the problem, but not the root cause of the power crisis.

The Legislature passed House Bill 14-343, which aims to repeal the law that allows the CUC board of directors to impose up to 3.5 cents per kilowatt per hour as surcharge fee.