By Bryan Manabat
[email protected]
Variety News Staff
THE Commonwealth Utilities Corp. is asking the Commonwealth Public Utilities Commission to lift the cap on its Fuel Adjustment Charge and allow the rate to rise to 44 cents per kilowatt-hour. CUC officials said global fuel prices have doubled, leaving the utility unable to absorb the increase.
The proposed rate — up from the current 24 cents — reflects the FAC formula and would be the largest adjustment CUC has ever sought, officials said during a special board meeting on April 2.
CUC Executive Director Kevin Watson said the petition is necessary to keep pace with soaring oil prices.
“We have filed a petition with CPUC to increase the FAC per the formula,” Watson said, adding that CUC was informed the oil price is now over $300 a barrel. He called the situation “serious” and said the utility is waiting for CPUC to secure a quorum and schedule a meeting.
The FAC covers fuel and fuel-related purchases and appears on customers’ monthly bills. The base rate, which funds personnel, operations, projects, and debt service, has not increased since April 2014.
On March 16, CPUC lifted the FAC tariff freeze, allowing CUC to adjust the rate from $0.19706 per kWh to $0.22075 per kWh. CUC later announced a further increase to $0.245 per kWh effective April 1, 2026.
However, CUC said the formula-based FAC for April 2026 is $0.44489 per kWh. Because CPUC capped the rate at $0.245, CUC must obtain commission approval before the higher rate can take effect. CPUC has not yet scheduled a meeting.
Fuel costs jump to more than $8 million a month
Chief Financial Officer Betty Terlaje said CUC’s fuel supplier notified the utility that prices would rise by more than 105%, effectively doubling monthly fuel expenses.
CUC currently spends about $4.2 million a month on fuel. Under the new pricing, that amount is expected to exceed $8 million, creating a monthly shortfall of roughly $4 million.
Terlaje said CUC has about $12 million in cash, but those funds are already committed to payroll, fuel purchases, and other obligations. At the current burn rate, she warned, the utility could run out of cash by June.
She added that collections lag 45 to 60 days and that higher rates may lead more customers to seek payment assistance.
Load shedding discussed but discouraged
CUC Board Chair Allen Perez said each day without an approved rate adjustment deepens the financial strain.
“For CUC, it’s an additional $4.2 million a month to meet the fuel requirements. We do not have sufficient cash reserves to weather that amount,” Perez said.
He said CUC has informed Gov. David M. Apatang and other island leaders that load shedding is among the options being considered.
Board member Simon Sanchez, appearing virtually, urged caution. While outages would reduce fuel consumption, he said they would also reduce revenue, making load shedding a last resort.
“What’s worse than higher power bills is having no power,” Sanchez said. “If you can’t buy fuel, you can’t pump water to people. You can’t provide power to the hospital.”
Perez agreed that load shedding would only “stretch the timeline” while CUC seeks outside funding and would disrupt water service, which depends on electrically powered wells and pumps.
Sanchez noted that the Guam Power Authority has cash reserves, a self-insurance fund, and revenue from contractual penalties — giving it more flexibility to absorb short-term fuel shocks. CUC, he said, has no such buffer.
Emergency measures under review
Perez said CUC has already briefed the governor and other leaders on the financial risks and the potential need for emergency actions.
Discussions included seeking federal assistance and, if conditions worsen, requesting a formal emergency declaration to unlock disaster-related funding.
CUC management is also exploring other measures such as negotiating extended payment terms with fuel suppliers and seeking short-term financing from local banks.
During the special board meeting, officials also discussed CUC’s FY 2024 financial audit, provided an update on CUC RFP 25-021 — issued Aug. 26, 2025, and seeking an independent power producer to build solar photovoltaic systems with battery energy storage across all islands — and reviewed CUC’s Saipan power pole replacement project.
Bryan Manabat was a liberal arts student of Northern Marianas College where he also studied criminal justice. He is the recipient of the NMI Humanities Award as an Outstanding Teacher (Non-Classroom) in 2013, and has worked for the CNMI Motheread/Fatheread Literacy Program as lead facilitator.
