Alleged $5M over-recovery under probe

Posted on Oct 14 2011
By Moneth Deposa

The Commonwealth Utilities Corp. overcharged its customers by more than $5 million in levelized accrued energy clause tariff, according to the Commonwealth Public Utilities Commission, citing a report of its consultant, Georgetown Consulting.

Because of this, PUC will be investigating the alleged overcharge-also called over-recovery-and the results will be submitted for consideration and appropriate action during the commission’s January 2012 regulatory session.

Commissioners Viola Alepuyo and Joaquin Manglona, in their letter to the Legislature on Oct. 12, indicated that the $5 million covers a few months from fiscal year 2010 to date.

“Since late 2010, CUC has been over-recovering revenues under the LEAC tariff. Georgetown estimates that this over-recovery now exceeds $5 million. Pursuant to the commission orders, this over-recovery should have been escrowed for immediate reimbursement to consumers. Georgetown has expressed concern that CUC has misapplied these over-recovered funds for non-fuel related purposes in violation of both commission orders and public law,” states the commissioners’ letter to House Speaker Eli Cabrera (R-Saipan) and Senate President Paul Manglona (Ind.-Rota).

In that same letter, the commissioners also expressed their strong opposition to the abolition of the LEAC tariff as recommended by a bill now pending in the House.

Georgetown earlier described the current LEAC rate as “unquestionably higher than required” and should be reduced at the earliest possible date. CUC has disputed this, saying the claim is based on incorrect and unsupported assumptions.

Based on CUC’s rate relief petition on water and wastewater on Oct. 11, refunding customers for any alleged LEAC over-collection will have no economic impact as revenue from the power division are not sufficient to cover the losses of the water and wastewater division.

“CUC has experienced an overall loss of $7.9 million for fiscal year 2011, or approximately 9.1 percent of revenues. A utility that is experiencing an overall net operating loss of approximately $8 million, as is CUC, has no ability to refund payments of any kind to ratepayers,” states CUC in its petition.

The LEAC rate is a component of the power bill that reflects the cost of fuel. It is supposed to go up or down to reflect the cost of buying fuel to run the power plants.

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