Annual CUC fuel bill up 120 percent

The Commonwealth Utilities Corporation’s annual fuel bill went from $27.5 million in fiscal year 2002 to nearly $59 million in fiscal year 2005 or an increase of over 120 percent in a three-year period.

Lt. Gov. Timothy P. Villagomez, in his State of the CUC Special Report Friday, disclosed that in FY 2003 and the first few months of FY 2004, CUC was paying an average of around $38 per barrel.

Villagomez said CUC’s latest tanker delivery came in at an aggregate amount inclusive of all costs associated to bring the fuel to Saipan, Tinian, and Rota at roughly $93 per barrel.

“This represents the highest fuel price ever paid by CUC thus far,” noted Villagomez, who used to be an executive director for the agency.

CUC is anticipating that its fuel bill before the end of this fiscal year will reach over $74 million if the price continues its current trend.

“Even within the last three years, there is approximately a $47 million difference in fuel price…but remember, the power rates are still the same…the same since 1989…when fuel was even cheaper than 2003,” he pointed out.

Fuel expenses alone, the lieutenant governor said, account for over 70 percent of CUC’s annual budget.

He said even with the implementation of the emergency fuel surcharge fee last year, a fee that brings in an average of $1.2 million per month, the utilities agency still expects a deficit between $30 million to $32 million dollars before the end of the year.

“Even if the $2 million monthly payment, totaling $24 million annually, by the central government is subtracted from the government’s obligations under the court issued temporary restraining order, CUC will remain in the negative to the tune of $6 million-$8 million,” Villagomez said.

He said this deficit amount, however, is still deceptive, as it does not factor in the costs for neither the operations and maintenance on its engines at Power Plant I nor the costs for operating and maintaining the water and waste water division, since those funds are diverted for fuel purchases.

Villagomez also underscored the need for CUC to accommodate big commercial customers such as hotels and garment factories.

At the moment, he said, there is about 15 megawatts of unconnected load within the CUC power distribution system and majority of such loads are large hotels and some garment factories.

He said these hotels and garment factories decided to self generate because of the perceived cost of self-generating versus the cost of power from CUC, and the reliability and qualify of power supply from CUC.

“This is unacceptable,” Villagomez stressed.

“The supply and stability of public utilities and infrastructure is a big factor on whether or not investors ultimately decide to invest in the CNMI,” he said, adding that CUC is one of the first agencies that potential investors gather information from.