Possible lower LEAC in next months

Posted on Dec 02 2014

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With fuel prices decreasing in the last three months, not only are drivers paying less at the pump but Commonwealth Utilities Corp. customers may also see a decrease in their power bills.

According to CUC board chair Dave Sablan Jr., “it is safe to assume that as oil market prices go down, CUC will pay less for the oil it buys under its contract with Mobil Oil Mariana Islands Inc. Thus, that reduced cost of the oil will most certainly be passed on to CUC’s customers,” Sablan said.

CUC has been reducing its Levelized Energy Adjustment Clause or LEAC rate in the past months, prompted by the lower prices of fuel in the world market. That has contributed to the reduction of power bills that customers pay every month.

LEAC represents the fuel component of a bill and accounts for 70 percent of power bills. The current LEAC rate is $.25168 per kWh.

“It would be very good, of course, to lower prices for CUC, but no one can predict the impact over a year’s time. As I said, though, as prices for oil continue to decline, CUC will pay less for the oil under its contract with Mobil, and that cost reduction in the price of oil will reduce the LEAC rate,” Sablan said.

“Customers will see a reduction in the cost of fuel oil that they pay each month when they receive their electricity billing from CUC,” he added.

The LEAC is a means to collect from CUC customers the actual “levelized” or average cost of diesel oil used to generate the electricity consumed by CUC customers in any given month.

Sablan assured that whatever amount CUC pays for the oil to produce the electricity for any month is all that CUC will collect from its customers for that month—based on the amount of kilowatt hours consumed per each household, government office or service, commercial establishment or private enterprise.

The Commonwealth Public Utilities Commission earlier this year allowed CUC to adjust its LEAC charge every month instead of every six months to allow CUC to adjust monthly pricing based on the “Means of Platts Singapore” or MOPS’ monthly pricing.

Jayson Camacho | Reporter
Jayson Camacho covers community events, tourism, and general news coverages. Contact him at jayson_camacho@saipantribune.com.

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