Rate hike in Telesource contract ‘on hold’

The cost of Telesource CNMI Inc.’s contract with the Commonwealth Utilities Corp. will not increase following the decision of the Commonwealth Public Utilities Commission to remove this element from the new electric base charge rate that will become effective next month.

Telesource CNMI Inc. is the independent power producer on Tinian. Its wants to be paid at a higher rate. This amendment to its contract—called change order No. 5—was approved last Nov. 29. The commission had approved this change order with the condition that it would take effect upon approval of CUC’s emergency petition for an increase in its electric base rate.

CUC deputy executive director Alan Fletcher and chief financial officer Charles Warren told Saipan Tribune Friday that the Telesource change order No. 5 was among the three items disregarded by PUC in the new base rate. The other two are the increase in employer contribution to the Fund and reduction in the dividends for the Commonwealth Development Authority.

“The proposed funding of the $1.304 million Telesource revenue requirement will be removed from the electric base rate evaluation and the material condition for commission approval of Telesource change order No. 5 has not been met and the change order remains unapproved,” states the CPUC order on Friday.

Change order No. 5 provides extensions of up to 15 years on the Telesource contract, with incremental increases each year that will be sourced from electric base charges. CUC and Georgetown filed an emergency electric base rate factoring in the Telesource change order. On Friday, though, the PUC approved a lower rate increase.

“It [change order No. 5] is on hold…and we will revisit this as soon as we can. But right now, because the rate increase for the Telesource contract is not funded, we have no authority to pay for that, the same with the increased Fund’s employer contribution,” Fletcher told Saipan Tribune.

Prior to CPUC’s approval of change order No. 5, the Telesource contract was still good for eight more years or until 2020. CUC paid the company $2 million annually to provide power to Tinian.

Fletcher pointed out that the PUC approval of the change order still stands but the rate increase in the contract will not take effect because it was not factored in the new base rate approved by the commission. He said implementation of change order No. 5 could only take effect when a new electric base petition is approved.