He said they were also not provided by CPUC of the letter it submitted to the Legislature and governor’s office regarding its opposition to the MFAC.
In its letter, CPUC narrated its findings on some technical problems and defects in the methodology of Senate Bill 17-84 which proposes to replace the LEAC with the MFAC.
Fletcher noted that it was CUC that submitted the bill which was introduced by Senate Floor Leader Pete P. Reyes, R-Saipan.
“All rates must be approved by CPUC and due to the lack of commissioners, CPUC was not functioning until very recently. This situation is one reason we submitted a bill to the Legislature,” he added.
Fletcher said while CPUC argues that the bill will have “a significant negative impact on commonwealth residences, business community, and government consumers” CUC thinks otherwise.
The bill will have a significant benefit on CNMI consumers by ensuring that they will pay a fuel charge that reflects immediate actual fuel costs, he said.
The current LEAC charge is a six-month charge that can vary widely from actual fuel costs, based on the changes in the price of a barrel of oil over that long period of time, he said.
He added that implementing an MFAC will eliminate the need for CNMI ratepayers to pay the significant costs incurred in administering the LEAC charge.
“The complex and cumbersome process of developing, updating and regulating the LEAC has resulted in significant costs for legal and CPUC consulting fees. These fees will be unnecessary under an MFAC,” he said.
CPUC states that the “measure currently has no formula by which consumers and the commission would know what is included in the monthly fuel adjustment clause,” but CUC maintains the legislation contains as an appendix a copy of the specific model and formulas that will be used to calculate the MFAC.
The model is based on the LEAC but is far less complex and burdensome to update, Fletcher said.
He said they will provide CPUC a copy of the MFAC model immediately upon implementation of the charge.
The legislation does not remove CPUC’s statutory authority over rates, he added.
CPUC states that “there is no provision in the bill that the proposed MFAC has been approved by anyone,” but CUC’s position is that MFAC will be reviewed and approved by CUC management prior to implementation.
“The MFAC charges will be subject to audit every three months to verify that it is collecting the proper amount of fuel-related charges. The audit will be done by an independent auditor who can verify the calculation,” Fletcher said.
Regarding the lack of provision for reimbursing consumers for the over-recovery of fuel related expenses, Fletcher said this assertion is incorrect because CUC has repeatedly stated that it has no verification that any over-collection in LEAC revenues has occurred.
There is substantial evidence to indicate that CUC’s LEAC and non-LEAC revenues are now and have been significantly less than expenses, he said.
He said CUC’s August financial statements revealed that CUC had experienced an operating loss of $8,120,441 for the year to date, and LEAC revenues had been $1,610,233 less than fuel expenses.
“In light of these numbers, allegations of ‘over-collections’ do not appear to be based in fact,” he said.
According to Fletcher, CUC has repeatedly stated that it is willing to meet with CPUC staff to discuss its analysis and the economic and mathematical details regarding why there has not been an “over-collection” of revenues.
The analysis is also contained in CUC’s recent water and wastewater filing, he added.
Fletcher said the assertion of CPUC that the entire process lacks transparency is also incorrect.
Also it is far from being “cloaked in secrecy,” as all calculations and relevant work papers will be available to the public, he said.
“CUC considers the process of calculating an MFAC to be open and easy to understand and describe, unlike the far more complicated and confusing LEAC calculation model,” he said.
CPUC’s statement that CUC would “abuse” the process of calculating an MFAC is simply not true or supportable by facts, he added.
“CUC considers such inflammatory rhetoric to be counterproductive to this debate,” he said.
