The Commonwealth Utilities Corp. has asked regulators to approve an increase in its Fuel Adjustment Charge as surging global oil prices push operating costs beyond sustainable levels, with officials warning the utility could run out of cash within months.
CUC executive director Kevin Watson said the utility has filed a petition with the Commonwealth Public Utilities Commission to raise the FAC—from the current 0.24 cents to 0.44 cents per kilowatt-hour—in line with the existing pricing formula.
“We have filed a petition with CPUC to increase the FAC per the formula,” Watson said during the CUC board meeting last April 2 at its Dandan office, describing the spike as the largest the utility has seen.
Chief financial officer Betty Terlaje said CUC had been notified that fuel prices would rise by more than 100%, effectively doubling monthly fuel costs.
“Basically, we were notified by our fuel supplier that the rate…is going to more than double at least by a little over 105%,” Terlaje said.
She said monthly fuel expenses are expected to jump from about $4.2 million to more than $8 million, creating a shortfall of roughly $4 million.
“Our current…we are purchasing about $4.2 million in fuel costs monthly. And with the new fuel cost…we’re going to estimate approximately $8.2 million, $8.3 million,” she said.
Terlaje said while the utility has about $12 million in cash, those funds are already committed to payroll, fuel purchases and other obligations.
“If it was the priority, we will run out in just a couple of months…we run out by June,” she said.
CUC board chair Allen Perez underscored the urgency, warning that delays in approving the increase are already costly.
“The increase in fuel pricing is basically costing us $140,000 a day,” Perez said.
Beyond the rate hike, board members and advisers outlined a narrowing set of options as the CNMI grapples with a global fuel shock.
During the meeting, board member Simon Sanchez cautioned against relying on load shedding as a primary response, saying it would cut both fuel use and revenue.
He said outages may extend fuel supplies but would also reduce income needed to sustain operations, describing it as a measure of last resort rather than a solution.
Perez acknowledged the concern, telling the board that load shedding would only stretch out the timeline while CUC looks for outside funding, but agreed it carries significant downsides for both customers and the utility.
Officials said they are studying the operational impact, including disruptions to water service, which depends on powered wells and pumping systems across the islands.
Sanchez also said unlike CUC, the Guam Power Authority has built up cash reserves, maintains a self-insurance fund, and is receiving additional funds from contractual penalties—giving it flexibility to absorb higher fuel costs temporarily.
By contrast, CUC lacks similar reserves, meaning it has little choice but to raise rates quickly to keep up with rising fuel expenses.
Perez also confirmed they have already briefed Gov. David M. Apatang and other island leaders on the situation, outlining the financial risks and the potential need for emergency measures.
The discussions included the possibility of seeking federal assistance and even a formal emergency declaration to unlock disaster-related funding if conditions worsen.
Terlaje said staff are compiling financial data to support those efforts, while management continues to explore stopgap measures such as negotiating extended payment terms with fuel suppliers and seeking short-term financing from local banks.
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