CUC, consultants iron out 4 stipulations

During a three-hour hearing Friday night before the Public Utilities Commission, officials from Georgetown Consulting Group and the Commonwealth Utilities Corp., detailed stipulation agreements relating to power rates and the utility company’s financial future.

The four stipulations relate to laws that mandate PUC and CUC to meet certain requirements relating to utilities.

Under Public Law 16-2, PUC must review and set utility rates before the Dec. 31, 2008, deadline set by law. If the PUC fails to meet this deadline, CUC will be forced to reduce power rates down to 17 cents per kWh.

CUC, under Public Law 16-17, must implement a business plan detailing how the company will achieve financial independence and provide reliable utility service.

CUC and Georgetown each submitted testimony prior to the hearing, but because the parties had sat down and agreed upon the stipulations prior to the hearing, individual testimony was not read. Instead, the agreed-upon stipulations were discussed with the PUC commissioners asking questions. Members of the public were also given the chance to comment.

The 17 pages of stipulations made recommendations to PUC about CUC’s business plan, base rate and fluctuating rate, and contract protocols.

Most questions by PUC commissioners to CUC and Georgetown officials were for clarification. Georgetown president Jamshed Madan and Larry Gawlik read the stipulations, with CUC executive director Antonio Muña adding any additional information or answering the commissioners’ questions.

One of the few times Muña was questioned concerned costs recovered under the proposed six-month fuel tariff. Both CUC and Georgetown agree on a six-month levelized energy adjustment clause. Currently, CUC uses a monthly fluctuating electric rate.

The commissioners voiced concern on making sure the funds were properly accounted for.

“With regards to the reserves, let’s say for example we’re in the six month LEAC period and every month, hypothetically, CUC is able to realize a reserve of $200,000 a month. So after four months, that’s $800,000. Who would have control over those funds, number one, and number two, how do we ensure they are not misused?” PUC chair Viola Alepuyo asked.

Under the agreed-upon stipulations, only one of the five reserves established by the LEAC would be under the control of the PUC and subject to PUC approval for disbursement or reprogramming.

“Will there be a separate bank account for these funds as we accumulate them? No,” Muña said.

PUC commissioner Kimberlyn King-Hinds then voiced her concern.

“I guess my problem isn’t building reserves,” she said. “But if someone tomorrow were to declare a state of emergency somewhere and that money is in a general fund, they can pretty much tap into that reserve, right?”

Muña responded by explaining that CUC’s general fund is also the general operating account and is there for emergencies.

“Our situation, although stable, we’re still in critical condition,” Muña said. “If our operating costs are not sufficient, then tapping into this reserve will be the answer.”

He added that CUC would make sure all monies are accounted for.

During a later portion of the hearing, PUC commissioner Kyle Calabrese asked why the stipulations included a part about emergency procurements. The section states that under a governor’s state of emergency PUC approval is not required for contracts, which is already the case.

Lillian Tenorio, legal counsel for Georgetown, said it was the second part of the section that was important. It states that if an emergency procurement takes place, CUC must file details of the procurement within 28 days, and any emergency procurement funded by anything but bond revenues must be included in a CIP expenditure ceiling.