The Commonwealth Utilities Corp. is preparing to file a formal petition to reconcile its long-delayed Fuel Adjustment Charge, with the central dispute revolving around whether CUC may recover an estimated $25 million in Aggreko rental-generation costs.
CUC chief financial officer Betty Terlaje said the utility is working with its consultant, Economist.com, to reconcile fuel costs incurred over the years.
“We have not reconciled in over 10 years, primarily because there was no [Commonwealth Public Utilities Commission] to submit to,” Terlaje said. “At this point, part of the cost of fuel is inclusive of the cost of Aggreko. Aggreko was brought on to help CUC meet its electric demand and serve customers. The FAC reconciliation includes the expense of Aggreko because, for one, it’s not in our rates.”
She spoke to the media during a break in the CUC board meeting on Dec. 11.
Terlaje said that if the FAC reconciliation results in rate recovery for CUC, the utility would use the funds to upgrade its aging engines or, ideally, purchase a new one—if CUC can afford it.
The last time CUC attempted to reconcile the FAC to incorporate the use of Aggreko engines was about 10 years ago. At the time, however, there was no CPUC quorum to act on the filing.
“We’re in 2025 now, and we are trying to reconcile the last 10 to 12 years,” she said. “We’re reconciling to see whether we’ve over-recovered or under-recovered. If we’ve over-recovered, we would have to return that amount to our customers. If we’ve under-recovered, then we would have to recover that cost by passing on a small portion in the rates and spreading it out over many years.”
CPUC chair James S. Sirok has repeatedly signaled during meetings that he does not view rental-generation expenses as fuel-related and therefore does not intend to allow them under the FAC.
In the end, the CUC board agreed that management and its consultants would finalize the filing by the next board meeting—scheduled for early January 2026. The filing will include the full FAC reconciliation, CUC’s justification for including Aggreko costs, and a proposed framework for ongoing FAC adjustments.
During management reports, CUC executive director Kevin Watson highlighted operational improvements, including reductions in non-revenue water on Saipan and Tinian through aggressive leak detection, repairs, and meter testing, with similar corrective actions planned for Rota.
The board was also briefed on progress in renewable energy procurement, with multiple bidders advancing to the next phase for solar and IPP projects. CUC reported securing a federal grant to fund a new generator for Rota, along with battery storage, Supervisory Control and Data Acquisition upgrades, and prepaid meters, while continuing work on numerous federally funded infrastructure projects totaling more than $245 million systemwide.
Board members stressed the need for stronger public communication, urging management to better inform ratepayers about the scale of federal funding and ongoing system upgrades through bill inserts, social media, and outreach events. Management agreed and noted plans for expanded customer education efforts.
Financial reports showed continued cash-flow pressure. While CUC reported $44.6 million in cash on hand as of Oct. 31, 2025, most funds are restricted, leaving limited flexibility for operations.
Operating revenues continue to trail expenses, and accounts receivable remain high at more than $57 million, driven largely by government nonpayment, including significant arrears from the Commonwealth Healthcare Corp., Commonwealth Ports Authority, and other agencies.
Although a memorandum of understanding was reached for CHCC to make monthly payments, board members raised concerns about missed payments and the handling of prior arrears, underscoring ongoing governance and cash-collection challenges.
The board also discussed staffing constraints, overtime costs, and the need to manage vacancies carefully amid declining collections. Management noted increased reliance on prepaid meters and enforcement of deadlines for government agencies to transition to prepaid service.
The board also revisited CUC’s long-running dispute with the Department of Public Works over road-cutting permits and penalties, which DPW claims now exceed $15 million.
CUC legal counsel Michael Ernest explained that the penalties stem from an old statute that DPW has applied to CUC emergency and unplanned utility work, requiring permits and permanent road restoration within a fixed time frame. CUC argues the law was never intended to apply to the utility, noting that emergency water, sewer, and power repairs cannot wait for permits and are constrained by public-sector procurement timelines.
Management said CUC already bears the cost of road restoration through contracted repairs and permitting fees, and that DPW’s additional penalties amount to government agencies charging each other for the same work. CUC has drafted corrective legislation to exempt emergency and unplanned utility work and to address the accumulated penalties, but the proposal has yet to be introduced in the Legislature.
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