The CNMI\u2019s public utility must pay the Commonwealth Development Authority a deferred $4.32 million in debt by October next year or risk management takeover. But CDA\u2019s executive director says they don\u2019t intend to do that.<\/p>\n
In an interview, CDA executive director Manuel Sablan indicated they do not intend to push the issue with CUC and risk rate increases on ratepayers.<\/p>\n
\u201cIf CUC were able to meet the payments stipulated in that [memorandum of] agreement, then there shouldn\u2019t be any need for the amendment [of the MOA]. As I understand it, they should be in a position to update their payments of the memorandum\u2026 If they don\u2019t meet that payment, then obviously CDA has that right to come in and take over management at CUC or litigate, but we don\u2019t intend to do that,\u201d he said.<\/p>\n
To pay this debt, CUC 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 this petition, which CUC expects to file near end of this month, the charge will be re-titled a \u201cdebt service surcharge.\u201d<\/p>\n
Sablan said if this prospect plays through, the agencies are \u201chome free.\u201d<\/p>\n
\u201cThere is a prospect for us to bring their account current. And if they are current then we are home free and that it will not trigger a rate increase,\u201d Sablan said.<\/p>\n
\u201cAt the same time, we indicated to them that if we cannot do it, then we are prepared to work out further deferral payment,\u201d he added.<\/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 2 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","protected":false},"excerpt":{"rendered":"
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