New adjusted power rate is 23 cents per kWh

The Public Utilities Commission Friday night unanimously voted and adopted the new adjusted power rate of $0.22989 per kilowatt hour.

The new rate will go into affect Jan. 1 and will last for three months.

PUC voted to implement a levelized energy adjustment clause, or LEAC, which will be set every six months on April 1 and Oct. 1. The LEAC will replace the fluctuating monthly electric rate that CUC set every month based on the price of oil.

The new rate is approximately two cents higher than CUC’s December rate, but considerably lower than the all time high of $0.413 per kWh set in the summer. The LEAC is only one component of each utility bill. Customers also must pay the base rate, which changes depending on the amount of usage. For residential customers using less than 500 kWhs, the base rate is $0.016. So those customers will pay the LEAC and the base rate for a total of $0.24589 per kilowatt hour.

PUC hired the Georgetown Consultant Group to investigate and prepare testimony for the rate review. Georgetown has worked with the Guam Power Authority, which according to Georgetown, has used the LEAC successfully for the past 12 years.

The LEAC is based on a formula using four factors. Three factors are totaled: the projected fuel expense for the coming LEAC period; the difference between the fuel revenue and actual fuel expenses as approved by the PUC; and refunds or credits from the supplier, excluding legal settlements. Those factors are divided by the projected retail kilowatt-hours for the next six months to develop the LEAC rate.

During Friday’s meeting at the Saipan Chamber of Commerce, PUC also adopted several other orders, including that CUC can petition for an emergency change in the LEAC if the utility agency reaches a threshold of $350,000 in fuel expenses during a LEAC period. Several deadlines were set as well. (see chart)

CUC executive director Antonio Muna said he was pleased with the outcome and appreciates the PUC and Georgetown Consultants recognition of CUC’s need to reverse its financial condition.

But, he said, “this doesn’t solve everything over night. Nor is this a free ride as well.”

PUC expects results from CUC, he added.

At the meeting, the Commissioners also voted to eliminate the contract ceiling that had been in place for the Georgetown Consultants and hearing examiner Harry Boertzel.

The move is necessary, PUC chairperson Viola Alepuyo said, because there are still many things that need to be done in regards to CUC’s power generation, as well as the water and waste water aspect.

PUC was tasked with reviewing and setting new power rates for the Commonwealth Utilities Corp. before Dec. 31, 2008—the deadline set by law—or CUC would be forced to roll back rates to 17 cents per kWh.