Antonio Muna, executive director of CUC, told Governor Benigno R. Fitial in a letter last month, Saipan needs at least 40.4 megawatts daily.
However, power plant I is able to produce only 8.5 megawatts, thus, much of the island’s demand for energy are supplied by Aggreko’s rented 15-megawatt generators.
Aggreko is paid $504,000 a month and CUC’s contract is good until Sept. 11, 2009 only.
Muna said CUC has the option to renew it for an additional six months but resources must be assured.
“In order to ensure that CUC is capable of producing sufficient and reliable power by Aggreko contract expiration and not have to implement a rotating blackout schedule that would be adverse to the CNMI’s economy and will place at risk the public health and safety of CNMI residents, I am respectfully requesting an additional CIP funding of $3.89 million to pay for continued rehabilitation costs of power plant 1,” Muna said.
This request was relayed to the U.S. Department of Interior and had since been granted.
Muna separately offered his expert testimony to the Commonwealth Public Utilities Commission about the importance of a steady flow of revenue for a stable power supply on the islands.
CPUC is now in the process of adopting new electric rates before a suspended law that mandates CUC to charge residential customers only 17.6 cents per kilowatt hour automatically takes effect in the absence of a new power rate formula.
Muna’s recommendation is that the CPUC adopt the existing rates for the next six months until a new one had been formulated.
“Liquidity is everything to us right now. Because we have no credit, we rely on the cash which our business generates. We have been perilously close to insolvency during the past year. But now, with key measures in place and a drop in the world oil prices, we can provide 24/7 power at affordable rates,” he said.
“If we can sell power, we can collect revenues to help pay for our operations. If oil prices stay down, our customers are more likely to be able to pay their bills. Perhaps, our rates are not high enough to create the CUC that we strive for, but at a rate freeze for six months would not force us into insolvency,” he added.
CUC incurred net operations losses of over $51 million from fiscal years 2004 to 2006.
It hasn’t been profitable since 1989 despite monopolizing the utility industry.
