'We have to request for what it costs to buy the fuel'

The Commonwealth Utilities Corporation Board of Directors convened yesterday to discuss the post-typhoon recovery, financial issues, and the Fuel Adjustment Charge

In a presentation by CUC Chief Financial Officer Betty Terlaje, the executive summary lists the FAC as “significantly underbilled.”

The CUC said it will petition the CPUC to have the FAC increased to match the cost of fuel at .60 cents per kWh.

“We have to request for what it costs to buy the fuel,” Chairman Allen M. Perez said.

Without emergency financing authority, CUC states it cannot sustain operations, fuel procurement, or continued recovery efforts beyond 2-3 months, if operations remain the same.

As recovery efforts proceed to restore the islands’ power supply, CUC said its foremost obligation is to address the crisis of rising fuel costs as a result of the US war with Iran. As the meeting commenced, the presentation confirmed CUC’s current financial straits.

“Every time we energize a customer, we are taking a loss.” Terlaje states.

Although cost containment measures have already been implemented, the CUC needs additional financing authority from the legislature in order to dip into currently restricted cash. Despite a reduction in revenue, $18.3 million of expenses incurred through recovery of Typhoon Sinlaku in the past 37 days since the storm’s windfall. Emergency restoration costs, fuel purchases, operational expenses, and vendor payments have rendered CUC insufficient money to sustain itself in the coming months. Meanwhile, $14.5 million in unrestricted cash has already been committed or reserved as funding for other projects. Total expenses are projected to reach or exceed $75 million within the 90-day emergency period.

The Board was presented with various options for relief - among them, a hiring freeze, voluntary deferment of earned premium pay, absorption of restoration duties among regular administrative responsibilities, and delayed discretionary spending. A reduction of employees and hours and prioritization of critical expenditures have already been implemented as measures by CUC.

Within the presentation was a cost breakdown of expenditures, clarifying that the company had already committed as much as $8.5 million directed toward materials and supplies, and $7.3 million on production fuel alone. In terms of government funding, Terlaje said CNMI government is “financially unable to help with the recovery or fuel crisis” while FEMA has not committed to upfront procurement costs for supplies, materials, or labor.

Board member Simon A. Sanchez suggested approaching restricted cash flows to relieve the company’s current debts, an idea that was later modified to include a formalized request for funds to the House and Senate. Loans from private, commercial banks were also looked towards as a possible avenue for financial resolution.

Meanwhile, Saipan is still half energized, while the island of Tinian remains fully offline with some restoration expected next week as temporary generators arrived on island in coordination with federal officials.