By Gemma Q. Casas
Variety News Staff

GOVERNOR Benigno R. Fitial will announce legal and financial remedies for the Commonwealth Utilities Corp.’s projected $8 million revenue shortfall following the Legislature’s decision to reduce residential electric rates.
Press Secretary Charles P. Reyes Jr. said the governor convened his cabinet members yesterday morning and announced that he was preparing to take action on the CUC situation.
“In order to prevent CUC from hitting the reef, we will take steps,” said the governor in the minutes of the cabinet meeting.
Reyes said the administration has consulted a U.S. financial accounting firm.
“The governor will make an announcement about the remedies we will take in the next day or two,” he said.
During the 2005 gubernatorial campaign, the governor and Lt. Gov. Timothy P. Villagomez promised a repeal of the CUC fuel surcharge, indicating that they supported lower power rates.
They did scrap the surcharge but replaced it with a new formula that doubled the power rates.
When asked about this issue, Reyes said they did not anticipate that the problem with the soaring prices of imported fuel would reach record highs in 2006.
“It’s clear that the situation was worse than we expected and that’s why we had to raise the rates,” said Reyes.
“The stocks are doing well because the crude oil prices are getting higher per barrel. It’s still on an upward path and we have to remember that the CNMI pays more for fuel because of our arrangement,” he added.
In 2005, the monthly average cost of imported fuel sold to the CNMI was around $2 million. By 2006, it went up to about $6 million, based on CUC’s records.
The House of Representatives is preparing to insert a provision on the yet-to-be-approved fiscal year 2008 budget of the CNMI that would grant CUC subsidies to buy fuel.
The House is scheduled to hold a session this week.