CPUC holds off decision on proposed LEAC adjustment

The Commonwealth Public Utilities Commission is “unsure” whether it will approve or reject a proposal to tweak the current levelized energy accrued adjustment, or LEAC, rate of the Commonwealth Utilities Corp.

In yesterday’s meeting, commissioners Viola Alepuyo and Joaquin Manglona opted not to decide on the proposal pending the submission of all necessary records and data from CUC, its consultant, economist.com, and the commission’s own consultant, Georgetown Consulting.

“The commission has yet made a determination and refused to decide [on the matter] because we want to make sure records are complete and everybody is given the opportunity,” Alepuyo told Saipan Tribune.

The commission has set a public hearing on the LEAC issue on Nov. 14; a decision is expected during a Nov. 17 business meeting.

Georgetown Consulting had already recommended the adjustment, saying there’s a need to do so because of “over-recoveries” made by the utilities agency, when it charged customers more than the actual amount it needed to “recover” the cost of fuel.

Alepuyo pointed out, though, that not all recommendations of its consultant gets the commission’s approval.

“We don’t follow all of Georgetown’s recommendations because ultimately, our decision is based on what is fair, just, and reasonable for the customers,” she said.

Besides the LEAC issue, the commission will also decide at its Nov. 17 meeting other CUC matters such as CUC’s loan application to the U.S. Department of Agriculture, audit reports and its findings, the Telesource contract for Tinian, net metering, and alternative energy.

Georgetown earlier said that CUC’s LEAC is unquestionably higher than required and should be reduced at the earliest date possible.

For instance, the current LEAC rate is set at an effective fuel price of $3.55 per gallon (inclusive of the volatility element). However, the current price of fuel oil and the October 2011 gasoil futures are priced at less than $2.90 per gallon—a difference of $0.65 per gallon or almost 20 percent. It believes that there was an over-recovery situation between May 2010 and November 2010.

CUC deputy executive director Alan Fletcher disputes this, saying there is no evidence of over-recovery.

He insists that the analysis indicating an “over-recovery” of LEAC revenues is based on incorrect and unsupported assumptions.

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.