CUC implemented the 35.7 cents per kilowatt-hour power rate on May 3, immediately after the governor signed Public Law 16-2 which suspends P.L. 15-94 or the power rate cut law for six months, or until Dec. 31, 2008.
The previous rate for residential customers was 17.6 cents/kwh.
According to Muna, the new rate also took into consideration the fuel costs not billed in February.
“Essentially, the rate doubled due to the increase in fuel costs per gallon of 92.76 percent,” Muna stated.
According to CUC’s table of computations, the projected fuel cost for May 2008 is $7,366,308 million, while the lubricating oil cost is $174,393 for a total of $7.5 million in projected fuel and oil costs.
Muna said the actual fuel cost in February 2008 was $5,533,794 million, while the lubricating oil cost $186,401, for a total of $5,720,195 million.
“We only billed $5.3 million [in February],” he pointed out, leaving CUC with an “under recovery” of $390,607.
Muna said the projected fuel/lube oil cost and the under-recovered amount allow CUC to estimate its revenue collection in May to total $7,931,308.
The total cost to be billed in May was divided by $22.2 million projected kilowatt-hour sales in the same month, “and that’s how we arrived at 35.7 cents per kilowatt-hour,” Muna said.
“We saw in February that we didn’t bill enough. We under billed,” he added.
He said there is still a possibility that CUC may not hit its target collection for May, adding that the agency is “not making money in this situation.”
He told the Variety that the 35.7 cents/kwh is paying for the cost of fuel only.
Muna said CUC has not consulted with the Public Utilities Commission about the new power rate, but the agency transmitted its formula to PUC recently.
PUC has asked CUC to explain its high power rate after some lawmakers — who passed the bill that became P.L. 16-2 — demanded “justifications,” saying that CUC should charge 25.3 cents/kwh only.
But Muna has a different interpretation of the law, saying that the rate model used and approved prior to the enactment of P.L. 15-94 was based on the prevailing fuel cost in the past and not according to the actual, current fuel cost.
