“A lack of funding has been a material cause in CUC failing to meet federal order requirements in a timely manner, thereby incurring millions of dollars in penalties, which continue to accrue,” CUC chief financial officer Charles H. Warren and Georgetown president Jamshed K. Madan said in their three-page stipulation.
Georgetown is the independent regulatory consultant of CPUC.
The stipulation stated that it is important for CUC to secure the USDA loan to fund its compliance with necessary capital projects including the federal order requirements.
During the public hearing held at the Marianas Public Land Trustees office on Capital Hill yesterday, Economists.com, CUC’s rate consultant, told CPUC they are now negotiating with USDA.
“Early feedback is what we characterized as encouraging. No deal is completed until all signatures are on the papers but we are very encouraged by what we see so far,” Dan V. Jackson, Economists.com managing director, said.
CPUC wants to make sure that CUC will use the loan proceeds to the intended purpose and suggested the creation of a special account.
Economists.com said the federal government is expected to impose very strict guidelines on how CUC can use the funding from USDA, and CUC will also be required to report how it uses the loan.
“This is a very serious business for USDA and they are good guardians of taxpayers’ money and they will assure that CUC only uses the money for the right purpose as approved by USDA,” Jackson said.
Warren said CUC continues to explore other funding sources, adding that they are also working with the U.S. Environmental Protection Agency and CNMI government to identify federal grants.
CUC said the proposed increase in its electric base rates will produce an additional $3.8 million each year, and this will provide funding for projected annual $1.02 million debt payment to USDA.
The stipulation also recommended the following:
• That CPUC will consider the establishment of a standby service charge to be applied to large self-generating commercial customers;
• The suspension of the Dec. 2008 contract review protocol for establishing an annual ceiling for internally funded capital improvement projects;
• The denial of Telesource contract change order number 5;
• The recognition that the government’s failure to pay bills seriously threaten CUC;
• That the contract review protocol for authorizing CUC to procure new office space is unnecessary;
• The approval of the procurement of transformers not to exceed $475,000;
• The approval of the procurement of a new computer billing system, not to exceed $1 million; and
• That CUC will petition CPUC by May 2011 for the approval of the net metering contract.
