HERE we go again.
Because global oil prices have soared, the cost of CUC’s power generation has increased, resulting in a higher Fuel Adjustment Charge.
No one complains when the FAC goes down because oil prices are lower. But as CUC has explained over the years, the FAC simply reflects prevailing oil prices. The FAC rises or falls depending on the cost of fuel.
In the summer of 2022 — another election year — the House utilities committee summoned CUC officials to an “emergency meeting.” Lawmakers wanted CUC to explain why the FAC was “high.”
“All of us have been getting a lot of calls in regards to the fuel costs and the power,” the committee chairman told CUC officials. “I, myself,” he added, “[incurred a] $900 utility bill… [so] we like to hear from you what will be the solution… to resolve this issue because it’s an old issue.”
How old?
It began in 2004, amid a weak local economy and rising global oil prices. CUC was unable to purchase fuel for its power plants because taya salape. The governor at the time was blamed for not paying government utility bills. CUC was blamed for mismanagement. The Legislature was blamed for failing to appropriate funds for CUC’s fuel costs.
From May to July 2005 — also an election year — a series of power outages hit the island. Residents learned a new and hateful phrase: rolling blackouts.
As an independent audit report noted at the time, it was a “tumultuous year” for CUC. Fuel accounted for 75.6% (!) of the operating expenses of CUC’s power division. “The cost was beyond the control of CUC. The price of fuel is driven by the worldwide economics of supply and demand.” Unlike other utility companies, the audit report added, CUC did not have a fuel adjustment clause.
CUC eventually adopted a fuel surcharge based on the shocking idea that customers should be charged according to how much electricity they use and the current price of the fuel powering the generators.
Not surprisingly, the fuel surcharge was about as popular as a root canal without anesthesia. The winning gubernatorial candidate vowed to scrap the “evil” fuel surcharge, but once he was in office, no such thing happened. Not even a newly elected governor could repeal basic arithmetic.
Instead, the surcharge was renamed the Levelized Energy Adjustment Clause, or LEAC. But this created confusion among some CUC customers, who believed they were being charged for a “leak” in the power system.
Hence, LEAC was renamed the Fuel Adjustment Charge, or FAC — which is what most of us say, complete with an appropriate exclamation mark, whenever we see our power bill.
There is absolutely nothing new about today’s public outcry over FAC hikes. Not even the supposed “solutions”: independent audits, long-term planning, renewable energy, better management, and so on. These issues were already discussed during the House PUTC meeting with CUC almost four years ago.
CUC has patiently explained the fiscal reality of providing utility services on a remote island in a typhoon-prone region. But for most of us — and for politicians vying for our votes — the only issue seems to be this: customers should not have to pay more regardless of fuel prices.
The real issue, however, is even simpler: who is going to pay for the fuel CUC needs to power the island? No fuel, no power, no water, no sewer services.
The central government can conduct another independent audit of CUC. The administration and the Legislature can review CUC’s renewable energy plans and management. Incidentally, CUC already provides status updates to the federal court as mandated by stipulated federal orders. It should also be pointed out — again — that CUC board members are gubernatorial appointees confirmed by lawmakers, as is the Commonwealth Public Utilities Commission, which oversees CUC’s operations, rate-setting, and accountability.
While we pursue the “truth” and propose “much-needed reforms,” who will pay CUC’s additional fuel costs?
Lawmakers who feel the pain of CUC customers should put their money where their mouth is and scrap the FAC. Afterward, they should appropriate funding to cover CUC’s fuel costs.
What’s the funding source? And how much would be needed?
CUC said its unaudited fuel expense alone totaled $51.4 million in FY 2025. For FY 2026, fuel expenses for the first six months reached $25.4 million. In April, the price per gallon doubled, and in May it increased again by another 37% to 38%. CUC said it spent $4.4 million in March. For the same level of usage at May’s rate of $0.60481, CUC said its fuel cost would reach $10 million. The newly approved rate, which took effect on May 15 and reflects April’s rate, allows CUC to recover $0.44489 per kWh. However, that is about $0.16 short of the calculated rate for May 2026. CUC said it is losing money every time it energizes customers.
For FY 2027, the administration said it hopes to collect about $101 million for government appropriations. That projection was made before Super Typhoon Sinlaku tore through the islands.
So if we get rid of the FAC, where will the CNMI government get the money to pay for CUC’s fuel?
That is the question.
That is the only question we should ask the CNMI’s would-be saviors.
Meanwhile, CUC still has to pay for the fuel needed to keep its power plants running.
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Zaldy Dandan is the recipient of the NMI Society of Professional Journalists’ Best in Editorial Writing Award and the NMI Humanities Award for Outstanding Contributions to Journalism. His four books are available on amazon.com/.
