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CUC urged to cut rates already
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Posted on Oct 29 2008
A lawmaker yesterday called on the Commonwealth Utilities Corp. to bring its rates down, pointing to the declining cost of fuel.
Rep. Heinz Hofschneider said a utility rate reduction is urgently needed given the continuing trend of local businesses shutting down.
“Given the steep plunge in the cost of fuel in recent days and projections for a continued decrease in prices, I request that the utility provide a date for a concomitant reduction in the power prices to our power users,” Hofschneider said in a letter to CUC executive director Antonio Muna.
He added, “This action is critical to the survival of local businesses and the well-being of our families. As you are aware, several businesses have recently announced closures…citing power costs as the primary reason for closing their doors. Jobs are lost, adding to the hardship already experienced by our families. It is imperative that we provide relief.”
The price of oil fell to $62.73 a barrel Tuesday on the New York Mercantile Exchange, a huge drop from the record of $147.27 on July 11.
However, the plunging cost of fuel may not show in the CUC bills until three months later. Muna, in a public hearing recently, told lawmakers that CUC’s contract with its fuel supplier. Mobil Marianas, provides for a “cost-averaging” scheme, which helps both parties handle the fluctuations in oil prices.
He added that CUC’s rate setting procedure reflects this method by providing for a three-month “look back period.” “When we set the rates for October, we look at July to see whether we over-collected or under-collected, then we adjust the rates accordingly,” he said.
