Saturday, April 16, 2011

No base rate hike 'at this time'

THE Commonwealth Public Utilities Commission decided on Friday night against the Commonwealth Utilities Corp.’s proposed electric base rate but ruled in favor of the levelized energy adjustment clause, or LEAC, charge.

At the special meeting held in the Marianas Public Land Trust conference room on Capital Hill, CPUC Chairwoman Viola Alepuyo said, “At this time the commission has not approved the base rate as requested by CUC as stipulated by the parties.”

CUC and consultant Georgetown Consulting earlier asked the commission to approve the base rate hike to generate the $3.8 million additional revenues needed every year to fund the U.S. Department of Agriculture loan’s annual $1.02 million debt service.

The commission’s ruling keeps the base rate at $0.016 per kwh for the first 500 kwh usage rate; $0.066 per kwh for 501 to 1,000 kwh; $0.086 per kwh for 1,001 to 2,000 kwh; and $0.127 for 2,001 and more. There’s a $5.60 monthly customer charge. The proposed base rate increase was $0.019 per kwh for the first 500 kwh usage rate; $0.078 per kwh for 501 to 1,000 kwh; $0.102 per kwh for 1,001 to 2,000 kwh; and $0.15 per kwh for 2,001 with the monthly customer charge at $6.62.

Alepuyo said, “I understand the concerns most especially to the USDA application and the need to ensure that there is a funding mechanism for that low interest loan. I also understand that with the breakdown that was provided during the public hearing on the various items that had to be funded under the stipulated orders, the need to raise much needed revenues in order to fund those provisions.”

She said just because the base rate has been disapproved by the commission does not mean that CUC cannot come to the commission again to justify a rate increase.

The commission decided that the low-income customers be sheltered for basic electric consumption of up to 500 kwh per month.

It also established a new lifeline customer class under the authority of 4 CMC §8141 (d) to which the existing monthly customer charge of $5.06 and existing $0.016 per kwh usage rate per month for the first 500 kwh apply.

In an earlier proposal, the CUC set the lifeline rates as follows: for 0-500 kwh, $0.016 per kwh; 501-1,000 kwh, $0.078 per kwh; 1,001 —2,000 kwh, $0.102 and 2,001 and higher, $.15 per kwh. A monthly charge of $5.60 instead of the regular $6.62 applies.

With the establishment of a new lifeline class, CPUC clarified with CUC whether it could craft and submit the lifeline program eligibility standards on or before May 2, 2011.

CUC legal counsel Deborah E. Fisher said, “Just as we are clear on that, we are submitting standards not regulations.”

Alepuyo agreed.

With the standards in the works, CPUC ruled that residential customers can apply for a lifeline rate provided they meet the eligibility requirements.

LEAC rate hike

Arguing that CPUC and the parties have no control over the price of oil, the commission decided in favor of a new LEAC charge of $0.34426 per kwh to be established effective April 16, and to continue in force and effect until changed by subsequent commission order to fund the following rate elements: (a) fuel and lube oil, $0.32691; volatility allowance, $0.01635 per kwh; regulatory and technical support, $0.001 per kwh.

The parties were in agreement on Friday night when Alepuyo inquired on the threshold — that in the event “the price of fuel drops so much,” CUC and Georgetown Consulting will come back to the commission.

Based on the stipulation jointly signed by CUC and Georgetown Consulting, in the event that Mean of Platts Singapore monthly pricing supplied by Mobil Oil Guam, Inc. to CUC is equal or greater than $3.55 per gallon or if it equals or goes below $3.20 per gallon per month, the parties will jointly petition to adjust LEAC in accordance with market conditions.

Hearing examiner Harry Boertzel said Georgetown has the responsibility of monitoring fuel cost.

Alepuyo said should fuel price goes down, the commission will be ready to call for an expedited hearing in order to give relief to the consumers.

Moreover, the utilities commission also ruled that CUC did not fail to submit documentary evidence to challenge Georgetown’s March 29, 2011 report that CUC over-recovered $5.864 million.

It also decided against a Georgetown recommendation to reimburse customers over the next 12 months commencing April 16 through a rate factor of $0.01831 per kwh.

Alepuyo finds there is a need to address the over-recovery issue as was stated by both parties — agreed by both parties. “I would like this issue expedited as was recommended. If there was going to be an over- recovery, consumer should get it earlier rather than later.”

CPUC also decided in favor of a recommendation to establish a new standby service charge of $5 per kwh, a new street lighting tariff, and a new municipal pumping rate.

Based on an earlier recommendation, the new standby service charge would be applied to large commercial customers that self-generate and have the privilege of using CUC as backup or supplemental energy provider.

The street lighting tariff, the recommendation stated, would be applied to all public and private lighting customers, and new municipal pumping rate would be applied to non-seasonal municipal or other governmental customers pumping water or wastewater.

During the meeting, Alepuyo checked with CUC if Dec. 31, 2011 was a reasonable time for the utilities agency to install meters and bill all water and wastewater facilities in accordance with applicable government tariff, to which CUC agreed.

For all the decisions made by the commission during the April 15 meeting, Alepuyo said, “All the approvals will be effective immediately. As soon as the hearing examiner sets it down in paper I will sign it and [our legal counsel Robert T.] Torres through his office will provide copies to the parties,” said Alepuyo.

Examiner assured that he would get the decision to Viola Alepuyo consistent with the findings no later than Saturday morning.

As of Saturday evening, Torres told Variety in an email that the commission decision was still en route.

Determination points

Moreover, hearing examiner Harry M. Boertzel prepared a report which included 10 determination points for CPUC to consider in making a decision on the CUC’s petition — as amended — for regulatory relief.

Of the related determination points — administrative and substantive — CPUC decided to defer discussion on the entire section on Changed Order Number 5 or CUC’s contract with Telesource on Tinian for further discussion in the CPUC October session.

In denying CUC’s petition to increase the base rate, CPUC finds that CUC bears the burden under 4 CMC §§ 8409 (e) and 8421 (a) of proving by preponderant evidence that the proposed rate is necessary, just, and reasonable but it believed CUC did not meet this burden of proof.

CPUC also ruled that based on evidence on record, it should exercise its discretionary authority under 4 CMC § 8431 (e) (2) to suspend the effectiveness of the requested rate increase in order to examine whether it is necessary when the central government, NMC and PSS have $4.47 million account payable to CUC.


CUC raised a concern on the use of “discrimination” in the report.

CUC legal counsel Deborah Fisher said, “The point is that the way discrimination is being used, CUC’s interpretation of that statute, we are talking about a rate structure, we are talking about cost allocation to various classes in that statute. It is not discussing collections activity…. We would just like to make this clear that the characterization regarding rate classes and that CUC does not end up having something on a record for a plaintiff’s law firm to start to pursue which is not appropriate. I don’t think that would be intended by the commission.”

Alepuyo agreed with Fisher.

“I recognize that CUC has taken exception to the language contained in these questions, most especially with regard to discrimination. I, too, do not want to see CUC involved in unneeded litigation,” she said.

She explained further, “There was testimony in the record that there was one person who made the decision whether to disconnect a nonpaying customer. There was no other testimony, however, and the commission did not ask if any other customers were given the same treatment. There was a question — a theoretical question posed, that if a person didn’t pay after certain amount of time were disconnected, the answer to that question is ‘yes.’ ”

She said there was no follow-up question from the commission inquiring if there was a customer who failed to pay yet was not disconnected and what are the steps taken to ensure that fines are collected from the nonpaying customers.

“Based on that, I find — and I want to make the record absolutely clear — there was no discriminatory practices with CUC. Now that decision itself may very well change in the event that this issue entered before the commission again. As it stands right now, I find there is no discrimination exercised by CUC,” Alepuyo said.

She also said that it is “troubling” that government agencies are disconnected and reconnected without being forced to pay. She, again, said this is not discriminatory.

Other determination points

In making the decision relative to the determination points presented in the report by the examiner, Alepuyo said she does not take each decision lightly.

“My statutory obligation is to ensure that rates are just and reasonable. I take this responsibility seriously, there are some of us in the room that live here, some of us that don’t are all a team as far as we are concerned with regards to making decisions, identifying the issues at the heart of the problem is coming out with solutions to make those decisions that need to be made. I wish the commission was in a position that we could generate power to our community without relying on fossil fuel with prices that go up and down depending on factors beyond anybody’s control. I have never taken the decisions that I have made as a commissioner lightly.”

She said in making decisions, she wants to make sure that the consumers are protected, on the other hand, that CUC can continue to provide the services that they are mandated to provide.

With regard to the first determination point, Alepuyo said, “I find that CUC did provide timely notice of the commission’s April 11 hearing.

Regarding the second point, she believed members of the public were given opportunity to present their views, including a testimony by Senate Vice President Jude U. Hofschneider, R-Tinian, during the April 15 meeting which Alepuyo would like included as part of the records.

On the third point, CPUC agreed to reserving its continuing jurisdiction in the docket proceeding.

It further ruled that CUC be ordered to pay for the commission’s expenses, including without limitation, consulting and hearing examiner expenses and fees and the expenses of conducting the hearing process and all further regulatory expenses incurred pursuant to “this decision.”

It also decided that Contract Review Protocol regarding the establishment of an annual ceiling for internally funded capital improvement be suspended.

The commission found it unnecessary that CUC’s March 21, 2011 petition under Contract Review Protocol for authorization to procure a new office lease space, “given that CUC’s representation that a new lease will only be obtained if it is less cost than the current lease.”

It also approved the petition by CUC to buy new transformers with an authorized expenditure ceiling of $475,000.

CPUC approved the $1 million authorized expenditure cap to computer-based preventative maintenance and budgeting program.

Lastly, CPUC agreed to institute an expedited investigation on its own initiative to determine whether the allowance for electricity expenses in previously approved water and wastewater rate awards continues to be just and reasonable.

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