Gov. Arnold I. Palacios and Finance Secretary Tracy Norita meet with the Commonwealth Utilities Corporation board members and other officials on Thursday.
THE Commonwealth Utilities Corporation and the CNMI government aim to finalize a settlement agreement regarding the government’s unpaid utility bills.
The CNMI government is CUC’s single largest delinquent customer.
On Thursday, Gov. Arnold I. Palacios and Finance Secretary Tracy Norita attended a CUC board meeting and proposed “offsetting” the government’s utility arrears with CUC’s liabilities to the central government due to its non-payment of the Office of the Public Auditor’s 1% fee.
CNMI law mandates that 1% of the funding appropriated to government agencies, including autonomous agencies, will be withheld to fund the operations of OPA.
“We hope to continue that conversation that we have … in offsetting of accounts payable both ways, and I think we made headway in our last meeting, and we want to see [where] we need [to] go in the sense of finality,” Palacios told the CUC board of directors. “I know that the federal court is really looking at us to settle these things and figure out how we go forward,” he added.
In an interview after the meeting, Norita said, “We’re talking about offsetting the current liability of the central government to CUC, which is around $10.9 million, with the liability that CUC has to the central government, which is around $10 million right now. We have both acknowledged that CUC’s liability to the central government could be higher, but it needs reconciliation. Right now, we’re going to follow the FY 2022 CUC audit, which … gives the CNMI government a baseline of $10 million to work with, while they reconcile the remaining [amount], which could be up to $17 million that CUC owes the central government.”
She added, “These are years and years of accumulated OPA fees that were never remitted by CUC to the central government, and so we’re using this as an offset on both liabilities that we owe on our side, and what they owe on their side. We are going to be working on a reconciliation back to 2003.”
Norita said, “The CUC board of directors and management still need to discuss it and vote on it. So should they agree on how we propose to approach this issue … then there will be a memorandum of agreement to memorialize it…. We’re just proposing a solution that could be brought to [Federal] Judge David Carter as our mutual solution to the arrears.”
For her part, CUC Chief Financial Officer Betty Terlaje said, “The governor in February made a commitment to the federal court that they would pay the current bills going forward, but they have been struggling to make those ends meet, and although they have made a good effort to reconcile and work with us and we’ve accomplished all that, and they have made some good payments already, they’re behind now, for about three or four months of current billings.”
She said CUC has held back from paying 1% to OPA “because we’re not collecting from other agencies and, you know, we have a big receivable from the government and so we haven’t paid [OPA] because we’re struggling to collect. We need all our funding to keep our utility services going.”
“Last year,” she said, “we started paying OPA’s 1% … then OPA asked if we could reconcile the previous amounts. We told them that we would work with them and reconcile it,” Terlaje said.
“We’ve come to an agreement with the governor and the central government that we could offset what they owe us. And as of today, they owe us about $10.9 million. We know we owe them more than that and we’re still reconciling the numbers and so we’ve agreed to offset $10.9 million. When we go back to [the Environmental Protection Agency] and the federal court, we can say that we’ve settled on the receivables for the government,” she added.
According to CUC’s previous accounts receivable report, the CNMI central government owed $13 million; the Commonwealth Healthcare Corp, $60.5 million; the Public School System, $224,647.68; the Commonwealth Ports Authority, $2.5 million; and other government agencies, $1.5 million.
