Privatization law will boost power rates—Muña

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Posted on Oct 04 2008
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The Legislature’s efforts to privatize the Commonwealth Utilities Corp. are commendable, CUC executive director Antonio Muña said Friday, but he disagrees with the means of getting there.

“The efforts of the Legislature are…unfortunately, at this point, we are all on the same page, it’s the vehicle which we arrive that we disagree,” he said.

The Senate and House of Representatives voted this week to override Gov. Benigno Fitial’s veto of the bill, requiring CUC to privatize its power system through a bidding progress, as opposed to a “request for proposals.” It provides a $250 million price tag that prospective private sector buyers must pay in order to acquire CUC. Further, it gives CUC the power to settle disputes with the Commonwealth Development Authority by issuing $45 million in preferred stock.

The move will take away from one of CUC’s goals: affordable power, Muña said.

“Anyone coming in can see [that] costs have to be paid for by customers,” he said, listing fuel, payroll, chlorine, and administration as examples. “All of that is customer driven. I only collect what I can charge for.”

Rates will go up because the principal needs to be recovered, he said. Even over a 40-year period, $2 million must be recovered through customers each month, accounting for an 8- to 10-cent rate increase, he added.

For the month of October, CUC residential customers are paying 33.7 cents per kilowatt-hour for the fluctuating fuel rate. The all-time high was set in August when customers were paying 41.3 cents per kWh. In May, CUC more than doubled the rates per kWh for residential customers.

“Where is the affordability in that structure?” Muña asked.

Another stipulation in the law, reinstating the eight-member board of directors, will cost the public, because board operating costs and salaries must be taken into account, Muña said.

He said he agrees with some the efforts to improve customer service, connections and reconnections.

“All those things I understand. I’m a customer, too,” he pointed out, adding that those improvements cost money.

Muña said he, along with Fitial, need to sit down and talk with legislative members.

“Let’s make reliability and affordability happen,” he said. “It can’t be from the Legislature’s standpoint. It’s a one-sided affair. They need to hear from us. They need to really come to terms.”

Muña said that Fitial is spearheading the effort to discuss the issue with the Legislature.

Charles Reyes, press secretary for the Governor’s Office, said he expects the discussions to take place shortly.

“We do have some very serious concerns, “ he said. “We want to be able to have a reasonable dialogue.”

Meanwhile, Muña said CUC received two bids to repair engine 7 at Power Plant 1. The bidding process ended last week. Evaluators will now make recommendations, and a decision should be ready by next week.

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