The Commonwealth Development Agency could take over the CNMI\u2019s public utility if they are not paid back some $4.32 million in debt by October 2016.<\/p>\n
To avoid this, the Commonwealth Utilities Corp. aims to renew a .021 per kilowatt-hour surcharge on its customers. This, however, is not expected to be an added burden on power bills. The charge expires May 1.<\/p>\n
If the Commonwealth Public Utilities Commission approves the petition, which CUC expects to file near end of this month, the charge will be re-titled a \u201cdebt service surcharge.\u201d<\/p>\n
In recent correspondence with CDA, CUC learned that it has to pay the dividend payment they agreed to pay CDA starting October 2012. The payment, though, was deferred for three years.<\/p>\n
The debt stretches decades back to 1985, when CDA loaned CUC $200 million from a federal grant pledge agreement they received so CUC could build its infrastructure. CUC hasn\u2019t paid much back. A legal battle in 2001 over the money was resolved in a memorandum of agreement the next year, which was revised in 2004 to turn that debt into equity for CDA.<\/p>\n
In 2009, the agreement was executed effectively turning that total debt of about $200 million and the total interest debt of $138,672 into equity, or $45 million in preferred stock held by CDA.<\/p>\n
CUC\u2019s dividend payment was set at two percent, or $900,000 a year of that amount. The deferred payment of three years is amortized over 15 years, for $180,000 a year.<\/p>\n
In total, CUC has to pay $1.08 million to CDA per year, after paying off the deferred $4.32 million by October next year.<\/p>\n
CDA can seek immediate board action from CUC in the event they do not pay their dividend payments, according to CUC counsel James Sirok, who updated the CUC board this week.<\/p>\n
\u201cIf we don\u2019t do that, the other alternative that they have is to take over the position they have as a preferred stock holder,\u201d Sirok said. \u201cOne of the remedies they have\u2026is to take over the management of CUC. They can either do that by asking the court to put a receiver in\u201d or have CDA manage the utility.\u201d<\/p>\n
Board director David Sablan Jr. asked if this takeover was \u201clegally enforceable.\u201d Sirok indicated it was.<\/p>\n
CDA is a preferred stockholder, he clarified. Preferred stockholders have some right to management of the corporate entity, Sirok said.<\/p>\n
\u201cBottom line\u2014as of Oct. 1 next year\u2014we will owe them $4.32 million,\u201d Sirok said. \u201cThe surcharge we are proposing will collect about four-and-a-half million dollars, on that two cents [charged].\u201d<\/p>\n
CUC rate consultant Dan Jackson said that CUC \u201cneeds to continue the .02 surcharge to pay off CDA or risk\u201d takeover.<\/p>\n
He noted this debt is a \u201cliability\u201d that hampers CUC\u2019s ability to borrow money.<\/p>\n
He noted that renewing the charge, \u201cfrom a practical standpoint, rate-payment won\u2019t change.\u201d<\/p>\n
\u201cBottom line, net impact would be no change in ratepayers\u2019 monthly bills,\u201d he said.<\/p>\n
The board directors voted to go before CPUC to renew and rename the charge. The motion to vote included a public information campaign to inform customers of this change.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Commonwealth Development Agency could take over the CNMI\u2019s public utility if they are not…<\/p>\n","protected":false},"author":47,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[366,49,3701,244],"class_list":["post-198883","post","type-post","status-publish","format-standard","hentry","category-local-news","tag-cda","tag-cuc","tag-dan-jackson","tag-utility"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/198883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=198883"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/198883\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=198883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=198883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=198883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}