Vice Speaker Timothy Villagomez expressed dismay over the Commonwealth Utilities Corp. current pitiful situation, noting that when he left the agency over five years ago, it had $18 million to $20 million in reserve funds.<\/p>\n
\u201cWhy is it only now that CUC can\u2019t self-sustain? Where has the money gone? When I left, there [was] $18 million to $20 million in the reserve account. If CUC has the reserve now and the government, as claimed by the administration, continues to pay its fair share, it would have been enough to continue to replenish its fuel,\u201d said Villagomez in an interview shortly after attending a youth forum Friday at Hyatt Regency Hotel Saipan.<\/p>\n
The lawmaker raised the same point during the forum, which was also attended by Gov. Juan N. Babauta and CUC comptroller Sohale Somare.<\/p>\n
Press secretary Peter A. Callaghan said that CUC keeps a $10 million reserve fund at the Bank of Guam. \u201cThis money is in the bank. They\u2019re not authorized to spend that money. I don\u2019t know if there was any $20 million in reserve funds,\u201d he said.<\/p>\n
Sources alleged that CUC may have spent some of its reserve funds to pay its personnel. CUC recently implemented a new salary schedule and reclassification of personnel, resulting in increased compensation for some employees.<\/p>\n
Callaghan denied this. \u201cThey didn\u2019t use it for personnel. The money is in the bank. If it wasn\u2019t there, BoG would have not guaranteed us a loan,\u201d he said.<\/p>\n
The bank had agreed to guarantee the government in the latter\u2019s contract negotiation with Mobil Marianas last May. The CUC eventually entered into a $120-million fuel supply contract agreement with Mobil, which is good for two years.<\/p>\n
Babauta had earlier said that the fuel surcharge cannot be eliminated amid the rising costs of fuel. He cited that that CUC was paying $30 million a year to buy fuel but due to increases in prices, CUC now spends $60 million a year.<\/p>\n
This was the reason cited by Babauta when he vetoed Villagomez\u2019s bill on Friday, saying that the agency desperately needs the money to supplement its funds for fuel purchase. Villagomez\u2019s bill aimed to repeal the law that authorizes the CUC to impose a fuel surcharge fee<\/p>\n
CUC said Saturday that it spends some $6 million a month for fuel. It buys 3 million gallons of fuel every month, which is reportedly priced at $1.78 to $2 a gallon. The CUC\u2019s 3.5 cent per kilowatt-hour fuel surcharge reportedly provides the agency \u201cpartial cost recovery.\u201d<\/p>\n
Villagomez said that CUC lacks a study that would justify the 3.5 cent fuel surcharge. Further, he said that CUC has not presented any study to show its true cost of power production and service.<\/p>\n
\u201cInitially, they raised it to 1.5 cents then to 3.5 cents after 30 days, without a comprehensive rate adjustment plan to bring the rates in line with the true cost of service. Without that study, how can you accurately say this is what we need in order to break even?\u201d asked Villagomez.<\/p>\n
He said that in the past, he had suggested to CUC to raise the regular rates then impose a 1.5-cent fuel surcharge. He said CUC has the authority to adjust its rates through Public Law 4-47 without legislative approval.<\/p>\n
\u201cAll I\u2019ve been saying is that, \u2018Okay, why don\u2019t you raise the rates by 2 cents across-the-board, then maintain the 1.5 cents.\u2019 I think that would get them out of the rainy days,\u201d he said.<\/p>\n
Villagomez said he is amenable to a 1.5 cent per kilowatt-hour fuel surcharge, \u201cif the number is correct.\u201d<\/p>\n
\u201cLet\u2019s go with that then. We can\u2019t just pick a number just because the policy says you can charge up to 3.5 cents,\u201d he said.<\/p>\n
In terms of revenues, he said that CUC should be getting $60 million a year from electricity, given its production of 420 million kilowatt hour.<\/p>\n
\u201cIf you multiply that by the rates that we have in place, it gives you an average of $60 million. Now CUC says it needs $72 million because of the increase in fuel cost. Fine, but the 3.5 cents across the board, multiplied by 420 million kilowatt-hour comes close to $16 million. So they\u2019d still be ahead by a few millions. Yet, they\u2019re saying that even with the fuel surcharge, they\u2019re not meeting their obligations,\u201d said Villagomez.<\/p>\n
CUC consultant Dennis Swann of Harris Group had earlier said that CUC is posting a 25-percent power loss.<\/p>\n
Villagomez said Friday that CUC should look at its own usage. \u201cCUC uses power for its own facilities including the water pumps, sewer. Do they count it as a loss?\u201d he asked.<\/p>\n","protected":false},"excerpt":{"rendered":"
Vice Speaker Timothy Villagomez expressed dismay over the Commonwealth Utilities Corp. current pitiful situation, noting that when he left the agency over five years ago, it had $18 million to $20 million in reserve funds.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-92504","post","type-post","status-publish","format-standard","hentry","category-local-news"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/92504","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=92504"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/92504\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=92504"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=92504"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=92504"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}