CUC wants LEAC adjusted monthly

The Commonwealth Utilities Corp. wants adjustments to the levelized energy adjustment clause—or LEAC rate—to be done every month because of the lack of quorum of its regulating body, the Commonwealth Public Utilities Commission.

“CUC is recommending to the Legislature that the LEAC be adjusted monthly so that any savings or increases are adjusted quickly using a straightforward template,” said executive director Abe Utu Malae yesterday.

The LEAC rate is a component of the power bill that reflects the cost of fuel. It is supposed to go up or down to reflect the cost of buying fuel to run the power plants. Only the CPUC can authorize any changes to the LEAC rate.

The LEAC rate was last adjusted early this year, increasing from $0.24446 per kilowatt-hour to $0.28125 per kWh, due to the increasing price of fuel in the international market. At that time, crude oil was trading at over $100 a barrel.

CUC said that since the adoption of the current LEAC rate in September 2010, CUC’s commodity fuel oil prices have increased from $2.05 per gallon to about $2.45 per gallon on Jan. 1, 2011—an increase of approximately 19 percent.

This month, however, the price of crude is down to $85 a barrel.

Sen. Juan Ayuyu (Ind.-Rota), chairman of the Senate Committee on Public Utilities, Transportation, and Communication, had questioned CUC’s failure to reduce its power rates since fuel prices were rolled back in June. The lawmaker reportedly accused CUC of violating a CPUC order for CUC to go back to the commission to adjust the LEAC rate when fuel prices go down.

Malae said yesterday that CUC has already responded to Ayuyu’s concerns in a letter last week. He said CUC cannot just make adjustments without the consent of the commission.

The commission does not function right now due to a lack of commissioners.

“CUC cannot petition for anything to the CPUC because there is none in existence. CUC has a laundry list of things for the commission to consider, including LEAC. We look forward to having a CPUC and we believe that will be very soon,” Malae told Saipan Tribune.

CPUC stopped functioning on June 7 when only Viola Alepuyo was left as its member. Last July 23, then-acting governor Eloy S. Inos appointed Joaquin S. Manglona as a member of the CPUC representing Rota. If confirmed by the Senate, Manglona will join Alepuyo and will serve a four-year term that will expire on July 21, 2015.

Once functional, CPUC is also expected to accommodate a new petition—this time on new water and wastewater rates. CUC earlier reported that its operating losses for both water and wastewater just for the eight months ending May 31, 2011, has already amounted to $2.8 million: $1.1 million for water and $1.7 million for wastewater. The CPUC last approved a rate hike for water and wastewater in May 2010.