Businesses brace for higher costs as Chamber warns of impact from FAC increase

Businesses across the CNMI could face increasing financial strain as electricity costs rise, with Saipan Chamber of Commerce president Joshua Wise warning that a two-fold increase in the Fuel Adjustment Charge may drive up operating expenses and force some businesses to cut services or consider downsizing.

Wise expressed concern over the impact of the Commonwealth Utilities Corp.’s recent fuel surcharge increase, saying the added burden could affect businesses across multiple sectors already navigating economic challenges.

“We are concerned that a two-fold rise in the FAC will place additional financial pressure on businesses across multiple sectors,” Wise said. “Increased utility expenses and higher shipping and transportation costs tied to fuel increases will inevitably raise the cost of doing business.”

The Commonwealth Public Utilities Commission recently approved CUC’s petition to raise the Fuel Adjustment Charge from 24.5 cents per kilowatt-hour to 44.489 cents per kilowatt-hour effective May 15. According to CUC, the surcharge could rise even further to 60.481 cents per kilowatt-hour if global fuel prices continue to increase. The FAC does not include CUC’s base electricity rate.

CUC said the increase reflects a sharp rise in ultra-low sulfur diesel prices in April, with fuel costs reportedly doubling compared to March amid continuing instability in global energy markets linked to the ongoing conflict in the Middle East.

The higher fuel costs have intensified concerns over affordability and the broader economic effects on the CNMI, particularly as businesses and residents continue recovering from recent challenges.

Wise said rising electricity costs could have consequences beyond monthly utility bills, creating a chain reaction throughout the economy.

“In response, some businesses may be forced to scale back certain products or services, or in unfortunate cases, consider downsizing or closure,” he said.

Despite those concerns, Wise emphasized the importance of continued collaboration between the private sector and policymakers to lessen the impact on the local economy.

“At the same time, this underscores the need for continued dialogue and collaboration between the business community, policymakers, and utility stakeholders to help mitigate impacts on the CNMI economy,” Wise said.

He added that while challenges remain, the Commonwealth’s business community has shown resilience through difficult periods in the past.

“Our business community has weathered significant challenges before, and we remain confident that through cooperation, innovation, and strategic planning, businesses can continue adapting while supporting economic stability and growth in the Commonwealth,” Wise said.

The latest increase comes as the CNMI continues to address long-standing concerns over energy costs and efforts to transition toward more sustainable energy sources while managing economic recovery efforts.