GUIDE TO CUC STIPULATIONS

The Commonwealth Utilities Corp. and Georgetown Consultants agreed on four stipulations that they recommended to the Public Utilities Commission at a hearing Friday night. PUC will use the information to help determine new power rates before Dec. 31.2008.

Here is an easy to understand guide to the stipulations.

Adjusting CUC’s electric rate structure

-Currently, CUC adjusts the electric rate every month. For the month of December it is 20.7 cents per kilowatt-hour.

-CUC and Georgetown agree on a six-month levelized energy adjustment clause (LEAC) that would become effective Jan. 1, 2009.

-Under the tariff, CUC would be able to recover: fuel and generation lubricant costs and delivered fuel and other costs required by the supplier. The LEAC tariff also would factor in CUC’s ability to establish and maintain a 30-day fuel inventory and to develop a reserve to support the availability and efficiency of generating units.

-The reserves used to support the generating units would not be dispersed or reprogrammed without PUC approval. The money will be put in a separate account and cannot be co-mingled with other CUC funds or reserves.

-CUC would be able to petition to change the six-month LEAC if under recovery reaches $350,000

-The first LEAC would be set from Jan. 1, 2009, to March 30, 2009, with subsequent tariffs set for six months

-New LEACs would be set every April 1 and October 1 to coincide with fiscal years

Business Plan

-Public Law 16-17 mandates CUC create a business plan detailing how it will achieve financial independence and provide reliable electric service

-CUC and Georgetown agree the PUC must review and approve the business plan

-Under the stipulated agreements, CUC and Georgetown will work together, under PUC’s oversight, to formulate a plan before an April 2009 public workshop. The public workshop will share the plan components and schedule of steps. PUC will review and take action on the plan at their June/July 2009 meeting.

-CUC and Georgetown agree two challenges are high priority: the preferred stock transaction between CUC and the Commonwealth Development Authority and the restoration of Saipan’s Power Plant generation. CUC and Georgetown will work together to prepare a restoration plan and present it to PUC for review and approval in April 2009

-CUC and Georgetown ask PUC to waive the requirements of Public Law 15-87, which mandates CUC meet certain renewable energy requirements by Dec. 31, 2008.

Reviewing CUC’s base rate

-Currently, CUC’s base rate remains fixed each month.

-Both CUC and Georgetown agree that more work needs to be done before PUC considers restructuring the base rate, and recommend a base rate hearing before the end of 2009.

-A PUC public workshop on restructuring the base rate should be conducted in April 2009

Protocol for reviewing contracts

-CUC and Georgetown recommend PUC review prior to any invitations to bid or requests for proposals are published

-The parties agree that a trigger of $350,000 be established for contract review

-A threshold of $350,000 also should be set for “divestures,” but CUC and Georgetown agree this should not include inventory

-If CUC receives only one procurement bid, CUC must provide PUC with justification as to why the bid should be approved

-Emergency procurements, such as those rendered under a Governor’s state of emergency, does not need PUC approval

-Protocol will not apply for ongoing CUC procurements

-Any extension of the Aggreko contract or the CUC/CDA stock transaction require PUC review and approval