{"id":228524,"date":"2016-05-25T06:06:48","date_gmt":"2016-05-24T20:06:48","guid":{"rendered":"http:\/\/www.saipantribune.com\/?p=228524"},"modified":"2016-05-25T06:06:48","modified_gmt":"2016-05-24T20:06:48","slug":"cuc-going-bankrupt","status":"publish","type":"post","link":"https:\/\/www.saipantribune.com\/index.php\/cuc-going-bankrupt\/","title":{"rendered":"CUC is going bankrupt"},"content":{"rendered":"
\"Commonwealth<\/a>
Commonwealth Utilities Corp. chief financial officer, right, explains to the board and management their financial status as of this month. CUC has a negative unrestricted cash of about $300,000. \u00a0(Frauleine Villanueva-Dizon)<\/figcaption><\/figure>\n

The Commonwealth Utilities Corp. is leaning toward insolvency as it currently has no money to pay for its day-to-day operations and debt service, among others. <\/p>\n

Chief financial officer Matt Yaquinto reported to the CUC board that, as of May 12, they have a negative $303,463 in unrestricted cash.<\/p>\n

\u201cWe have a negative unrestricted cash when you take into consideration what we have to pay Mobil and also our outstanding checks,\u201d Yaquinto said. <\/p>\n

The board has been warned of not having enough money earlier this year, with a projection that they will not have funds for operations by October. However, as early as now, CUC already has a negative unrestricted cash.<\/p>\n

Unrestricted cash is the money that the corporation uses for its operations such as buying fuel, maintenance, supplies as well as capital improvements, debt service, and general and administrative costs, even including the board of directors\u2019 expenses.<\/p>\n

\u201cOur fuel is our largest expense which is roughly $800,000 to $1 million,\u201d Yaquinto said.<\/p>\n

While CUC said it has \u201cdecreased spending in real terms to $28.2 million from 2005 to 2014,\u201d they are averaging a cash loss of $1 million per month over the past year and have lost a \u201csignificant amount of customers.\u201d <\/p>\n

The financial report said that on 2014, CUC\u2019s annual kilowatt per hour sales fell to $205 million. An average residential customer today now only uses approximately 400 kWh.<\/p>\n

\u201cIt\u2019s significant because basically we have the same infrastructure and you would have more fuel cost but your fixed cost or your administration cost, that basically doubles because you have to allocate kilowatt hours,\u201d Yaquinto said. <\/p>\n

Revenue must increase<\/strong><\/p>\n

According to Yaquinto, CUC \u201chas not and is not currently billing or collecting enough revenues to ensure long term viability.\u201d<\/p>\n

\u201cRevenues must increase,\u201d Yaquinto stated in his report.<\/p>\n

\u201cOur revenue isn\u2019t high enough to sustain were we need to go,\u201d he added.<\/p>\n

Due to its financial condition and history of losses, CUC is currently \u201cnot bankable,\u201d according to Yaquinto.<\/p>\n

\u201cWe can\u2019t go out and get loans unless we get very high interest rates,\u201d Yaquinto said. <\/p>\n

\u201cI looked at about 10 utilities in the mainland and usually they have approximately 23 weeks of worth of cash in their books. Now some of that and this includes Guam Power Authority, some of that is because they have issued bonds and they have covenants,\u201d he added, \u201cWe\u2019re not even close to that. If we can repair our balance sheet, then we may be bankable.\u201d <\/p>\n

To \u201cincrease revenue,\u201d the CUC board discussed addressing losses and theft, utilizing and increasing the number of prepay meters, implementing new telephone pole rates for Docomo, and the anticipated hooking up of Best Sunshine International, Ltd. to the grid for their upcoming project, and addressing accounts receivables particularly from the government to benefit their financial status.<\/p>\n

In an interview, vice chair Eric San Nicolas said they are doing something \u201cbig picture-wise\u201d on addressing issues and restated how they are addressing the government accounts receivables. <\/p>\n

\u201cAnd then we\u2019re communicating with the central government to continue their payment on a monthly basis. I believe that\u2019s one of the items of discussions when we\u2019ll meet with the acting governor [today],\u201d San Nicolas said.<\/p>\n

\u201cAnd then we\u2019re on the verge of finalizing another agreement with the [Commonwealth Ports Authority] board to address both of our concerns financially from both sides,\u201d he added.<\/p>\n

San Nicolas also mentioned renegotiating their contract with Mobil and hope that they realize savings from there. <\/p>\n

These, according to San Nicolas, will \u201cincrease their revenue\u201d without affecting customers.<\/p>\n

\u201cThat\u2019s the key, to put us in a better financial situation without burdening the residential customers,\u201d San Nicolas said.<\/p>\n

However, Yaquinto, in his report, stated that the government is only 17 percent of their total revenues and even if they paid their bills in full, CUC would still have had significant losses over the past several years.<\/p>\n

\u201cA lot has been said that the government, if they just get their bills, everything will be okay. But the government is just 17 percent of our revenues, 53 percent are commercial, and the rest are residential. So even if the government paid us, I think it\u2019s roughly $25 million that they owe us, but we still owe OPA (Office of Public Auditor) money that we haven\u2019t been paying. Even if they pay us 100 percent, we still have significant losses so we still have some issues,\u201d Yaquinto said.<\/p>\n

The Public School System, which earlier owed CUC some $3.8 million, has been paying the utilities corporation $100,000 every month. But this cash inflow for CUC would go directly to the Commonwealth Development Authority as they aim to keep their account current and pay partially what they owe CDA at $4.3 million.<\/p>\n

The agreement CUC entered with Commonwealth Healthcare Corp. for it to pay its $16 million debt would result to a deficit of about $3 million to $4 million a year for CUC. <\/p>\n

Issue with CPUC<\/strong><\/p>\n

San Nicolas also mentioned during the meeting how they would have generated about $6 million if only the Commonwealth Public Utilities Commission acted on their rate case last year, Docket 15-02, which sets a uniformed rate of $0.069 per kilowatt hour to residential customers and if the commission acted earlier this month on their Docket 16-01, which adds two line item of charges to customers for the typhoon recovery and capital improvement.<\/p>\n

\u201cIf all of those would have come into play, as of right now, or maybe by the end of the fiscal year, we could have been $5 million or $6 million in a better position,\u201d San Nicolas said. <\/p>\n

\u201cI just want that to be very clear, since members of the media are here, just so that we have an indication that this board is just not sitting doing nothing. Sometimes we are at the mercy of another body,\u201d he added. <\/p>\n

However, it was the board itself who motioned to withdraw Docket 15-02 in February this year after CPUC didn\u2019t hold a hearing late last year. They also requested for the rate cases, including Docket 16-01, to be deferred during the rate hearing with CPUC this month resulting in it being moved to CPUC\u2019s October session. <\/p>\n","protected":false},"excerpt":{"rendered":"

The Commonwealth Utilities Corp. is leaning toward insolvency as it currently has no money to…<\/p>\n","protected":false},"author":51,"featured_media":228547,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[94],"tags":[915,49,1421,10169],"class_list":["post-228524","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-headlines","tag-cpuc","tag-cuc","tag-eric-san-nicolas","tag-matt-yaquinto"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/228524","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\/51"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=228524"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/228524\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media\/228547"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=228524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=228524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=228524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}