Commonwealth Utilities Corp. legal counsel Michael Ernest said CUC is moving toward seeking a recovery surcharge from ratepayers as an alternative to a proposed $40-million line of credit that remains tied up in the Legislature, saying the utility cannot continue waiting for lawmakers while thousands of customers remain without power following Super Typhoons Sinlaku and Bavi.
CUC executive director Kevin Watson, meanwhile, told the Commonwealth Public Utilities Commission that about 3,000 customers remain without electricity, with power restoration at about 81% on Saipan, 95% on Tinian, and 23% on Rota. Watson said CUC's cash crunch has forced the utility to stop most overtime and premium pay and delay contracts needed for restoration.
Ernest made the comments during public comments Monday, Aug. 17, at the CPUC office at the Marianas Business Plaza.
He said the CUC board authorized management to petition CPUC for a recovery surcharge in lieu of the proposed line of credit because legislative authorization for CUC to borrow has yet to become law.
"So, in lieu of them actually authorizing CUC to borrow, CUC has no choice but to petition the CPUC for a recovery surcharge, which will allow us to get the funds needed to hopefully connect the thousands or so customers who are still awaiting connection for well over 100 days," Ernest said.
"We can't wait for the Legislature," he added.
Ernest emphasized that CUC had not yet formally filed the surcharge petition with CPUC.
Asked whether the surcharge would be incorporated into CUC's existing rate case or filed separately, Ernest said no decision had been made.
He later said borrowing remains CUC's preferred option.
"CUC's preferred course of action is not to do another surcharge," Ernest said. "We don't want to stack on rate increases on rate increases."
Ernest said CUC expects a majority, if not most, of the principal associated with eligible restoration expenses to eventually be reimbursed by the Federal Emergency Management Agency.
"If that's what the Legislature forces us to do, then that's what we will do," Ernest said of the surcharge. "If the Legislature forces us to recover the costs in three years instead of five years, that's what we will do. We're trying to get relief to the rate payers, but we have been receiving a complete stonewall from the Legislature."
The House and Senate are seeking to reconcile differing approaches to legislation addressing CUC's borrowing request.
Watson later told CPUC that approximately 3,000 customers remain without power, with most on Saipan and a significant number on Rota.
"We do still have approximately 3,000 customers without power," Watson said.
He put restoration at about 81% on Saipan, 95% on Tinian, and approximately 23% on Rota.
Watson said CUC has discontinued most overtime while it awaits action on the $40-million line of credit it requested in April.
"We eliminated premium pay. We eliminated overtime. And we put a hold on contracts," Watson said. "You have to have money to pay."
He said CUC must generally pay restoration costs before FEMA reimburses eligible expenses, worsening the utility's cash-flow problem.
Watson said CUC still owes the Guam Power Authority more than $11 million for mutual aid and acknowledged the utility is operating in the red.
"We don't have an endless supply of money. As a matter of fact, we're in the red. We owe more than what we have," Watson said.
He said CUC is stretching available funds to ensure it can continue buying fuel and operating the power system for customers whose electricity has already been restored.
Watson estimated CUC has already spent between $70 million and $90 million on restoration and recovery work.
"It is very frustrating, not just for me and the workers for CUC, but all of those customers that have still no power for over 120 days," Watson said.
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