Senate adopts bill to freeze electricity rates

The bill proposes to amend Title 37, Chapter 4, § 413 of the Palau National Code to “provide appropriation to the Public Utilities Corporation to establish equitable electricity rates; to require approval of fuel rate increase; to subsidize fuel costs and operational needs; and to freeze current electricity rates.”According to HOD findings, the fuel costs that PPUC charges to it customers have become “an inequitable burden.” Further, the fuel costs charges will continue to rise as the price of a barrel of crude oil increases worldwide. A fuel charge is the cost of fuel associated with producing electrical energy per kilowatt-hour – a unit of energy equal to the work done by one kilowatt in one hour.In an attempt to lighten the burden on electricity consumers, particularly low-income households, HOD has proposed to appropriate funding to keep PPUC functioning for at least a year without having to raise its electrical rates.HOD has proposed to appropriate $1.5 million to PPUC to subsidize the “cost of fuel charge.”  The source of funding for this appropriation as indicated in the body of the bill will come the “Compact of Free Association 211(b) Net Economic Costs Account.”  Moreover, HOD suggests using part of the $8 million loan received from Mega Bank for improvements and upgrade of the Palau International Airport to defray PPUC’s charges; however, though the funds are available, it requires Mega Bank’s consent in order for the funding to used for other purposed than its original intent.In related news, President Tommy Remengesau, in a letter to Speaker Antonio Bells, made a similar proposal to use $3 million of the Mega Bank loan to subsidize – as a grant – PPUC, and in the process maintain electrical costs at an affordable rate.  Remengesau, however, wrote that though the funding is available, the OEK must do its part – make the appropriate legislations and necessary approvals.  Remengesau wrote “I will make the appropriate contacts to request Mega Bank’s approval to use the funds for this purpose,” and urge that OEK work urgently in a cooperative manner to move things forward.If the bill passes and becomes law, PPUC will be obligated to maintain its May 31, 2008 fuel charge rates to residential customers who use 500 kilowatts or less per month and commercial customers who use 2000 kilowatts or less per month until “the rate freeze reaches the amount” appropriated through House bill No. 7-119-13S,HD1.