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On permanent regulations to increase CUC rates
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Posted on Oct 23 2006
[I]Editor’s Note: The following are the remarks that Rep. Francisco S. Dela Cruz read during the public hearing held Oct. 18 at the Oleai Elementary School cafeteria to make permanent the regulations governing the increase in CUC electric rates.[/I]
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Good evening. My name is Representative Francisco S. Dela Cruz.I am here to present my comments on the proposed permanent regulation of CUC’s electrical rate.
While I wholeheartedly agree that CUC needs to increase its rates to meet the ever-rising cost of operating its facilities, it is imperative that CUC first begin to look at the cost structure as it pertains to the temporary or emergency regulation that is now in place.
The status of CUC at present was brought about by mismanagement and the inability to forecast costs associated with running this utility. Let me just iterate some points:
First, when CUC initiated the built, operate, and transfer scheme with Telesource, who is operating the Tinian plant, and PMIC, which operates Power Plant 4 here on Saipan, CUC took it upon themselves within the contracts they signed with these firms to buy and deliver the diesel fuel and lubricants needed to run the engines to these firms. This I believe was the biggest mistake CUC ever made. I believe that fuel and the lubricant cost should be borne by the private company and not CUC.
Second, CUC became lax in the field of enforcement. For years there had been illegal tampering thus creating line losses. These were never looked into and investigated up until now. This, at the same time, was revenue lost to CUC. The house committee on JGO is now deliberating on a bill to put teeth on the crime of theft of service.
Third, CUC as an autonomous agency began a process of hemorrhage necessitating funding aid from the central government. Since 2005 up until just recently the central government could not continue to absorb the cost of purchasing fuel for CUC as it itself is in a state of the same illness CUC was in and continues to be in.
On July 22 this year, CUC implemented its new rate structure and the customers of CUC felt that this was not acceptable. I personally feel that this was a drastic increase in power rate but I also feel that this will just be temporary so as to have CUC reorganize and restructure itself.
As for the present rate I honestly feel that this is exorbitant and a decrease should be in order. At this time I ask that CUC reevaluate this rate as I feel that, at most, 21 cents per KWH should be the present rate for residential customers.
As the Legislature is not privy to the ongoing RFP as per the CUC advisory committee, I am beginning to think about introducing a resolution to have CUC turned into a community cooperative utility. By going this route, the people of the Commonwealth will be the owners and stakeholders of this one last utility firm in our Commonwealth.
I think that if we present this to the Retirement Fund, they will be more amicable in loaning the funds needed to restore the engines at CUC as they will also be part-owners. By restoring or rehabilitating the engines, we can begin to realize savings as the engines will be more efficient and burn less fuel. So how exactly will this work? I believe that, first, we must hire management professionals as well as technical experts in the field of power plants.These professionals will be answerable to the people of the Commonwealth and to no one else.
I applaud the present management team that is now with CUC and I ask that they treat and run CUC just like any private company would run itself. I ask that you put your efforts toward the restructuring and sound management of CUC.
On a final note, and to the question as to whether this rate regulation should be permanent? I without a doubt would have to say no at this time.
I thank you for your time in having me present my comments.
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