The commission noted at least seven major technical problems in the bill, including the absence of formula by which consumers and the commission would know what is included in the MFAC.
“When rate tariffs cannot be expressed in numeric terms they are presented in terms of a formula or process similar to the commission’s mandatory filing requirements. Senate Bill 17-84 does not contain description of the process that would be used to calculate the MFAC,” Commission Chairwoman Viola Alepuyo and Commissioner Jack Manglona said in their letter to Senate President Paul A. Manglona, Ind.-Rota.
The bill was introduced by Senate Floor Leader Pete P. Reyes, R-Saipan, and was proposed by the Commonwealth Utilities Corp.
Section 1 of the bill, states that CUC charges two types of monthly electric rates to its two ratepayers: the first rate is called the “base rate” which is composed of a monthly charge and a rate per kwh of electric usage.
According to the bill, “Notwithstanding any law or regulation to the contrary, in calculating the fuel pass through charge for customers, CUC shall immediately discontinue the use of the Levelized Energy Adjustment Clause model, and substitute the LEAC model with the Monthly Fuel Adjustment Clause MFAC model.”
The bill stated that the MFAC calculations will be binding on CUC and will be included in the subsequent month’s MFAC calculation without a public hearing and the prior approval of the commission.
Alepuyo said Georgetown Consulting Inc., the commission’s regulatory consultant, identified other technical problems in the bill:
• There is no provision that the proposed MFAC has been approved by anyone.
• There is no summary provided to consumers that would tell residential, business, and government consumers the effective date of the proposed change, the magnitude of the proposed change, and the impact of the proposed change, both in terms of the percentage and dollars, on a residential customer using 500 and 1,000 kwh per month.
• There is no expressed provision in Senate Bill 17-84 for reimbursing consumers for the over-recovery of fuel related expenses that are known by CUC to have already occurred.
• Senate Bill 17-84 lacks transparency. CUC would be free to control 80 percent of the cost of electricity to residences, businesses, and government consumers without providing notice of the change and the amount, conducting any public hearing to receive comment and evidence from consumers, and providing to consumers and the commission work papers supporting any change to the MFAC.
• No information is provided on the reconciliation process other than one line labeled “variance from prior fuel adjustment clause.”
• There are no provisions for public hearing or commission oversight there should be work papers available to consumers, interested parties.
Alepuyo and Jack Manglona said the commission is aware of the efforts by CUC to “eliminate its accountability for the reasonableness of its production fuel-related expenses of $75 million annually at current market prices which comprise 80 percent of its total operating expenses.”
The commission encourages the Senate to conduct public hearings to examine what CPUC believes to be a significant negative impact, which the legislation would have on the commonwealth’s residences, business community and government consumers.
