CUC gets $5 million subsidy for rate discount

The Commonwealth Utilities Corp. has received $5 million from the central government for the planned rate credit.

A law, which allowed CUC to double the rates in May 2008, has reprogrammed $9 million for the relief program. The program, as approved by the House of Representatives, entails taking 30 percent off of residential billings and 10 percent off of commercial billings. The discounts are proposed to apply retroactively beginning May 2008.

Assuming fuel costs remain at their May levels, the $5 million now with CUC would be enough to pay for the discounts through mid-September 2008.

Although the relief will not come from CUC’s coffers, CUC executive director Antonio Muna said the program might prove financially damaging to the utility.

“CUC advises that it agrees with establishing the EFC (electric fuel charge) credit fund and giving relief to CUC customers,” Muna said. “However, the fiscal reality is that the CUC received the funding at a time when CUC needed a fiscal subsidy to pay for fuel. Revenues collected in May were for billings in March, while residential EFC rates were still artificially set at 17.6 cents per kWh. The best intentions of the Legislature to give EFC rate relief would further exacerbate CUC’s adverse financial condition.”

The measure cleared the House of Representatives on Wednesday, and is headed to the Senate for action.

The House, when it passed the bill, ignored another request from Muna. A proposed amendment to allow CUC to change rates in the middle of the billing cycle was eliminated during debate on the House floor.

Muna said this amendment was necessary because CUC’s accounting software does not support applying rate changes which will essentially have customers paying different rates. He said that a software reprogramming “is not an easy fix.” It may take 180 days to complete and costs money.

Under existing law, CUC cannot charge new rates until after a meter is read. The rationale behind this is that there is no way to tell how much power a customer consumes before and after the rate increase.

But this system also means that if there is a rate increase, those customers whose meters are read first will be paying the new higher rate, while those customers whose meters are read last will continue to pay the lower rate until their meter is read.

According to Muna, the only way CUC could comply with the billing requirement without software changes is to have the meters of its 15,000 customers read all in the same day. But this is not possible, he said.

“CUC proposes that [the billing requirement] be suspended until such time that the reprogramming of CUC accounting software can be funded and accomplished; otherwise, CUC will have to hire enough meter readers to read all meters in one day, plus additional vehicles,” he said.