“[But] we…recommend no change in rates for lifeline rates at this time,” said Jamshed K Madan of the Georgetown Consulting Group, which serves as independent regulatory consultant to the CPUC.
CUC currently has no lifeline rates, which are for low-income customers.
In a nine-page recommendation to the CPUC, Madan said when the commission reviews and implements rate changes to recover the additional 40 percent of revenue requirement an interim lifeline rate can be reviewed again.
“We say ‘interim’ because [the Commonwealth Utilties Corp.] and [Georgetown] have stipulated and the CPUC has adopted the stipulation that recommends that a lifeline tariff be prepared for CPUC consideration and implementation as a part of a full cost of service study,” Madan said.
Under the proposed wastewater rates, the residential customers will pay a monthly service charge of $5.60 starting June 5, 2009 and $8.20 starting on Sept. 4, 2009.
The former rate was $3.
CUC’s rates must reflect at least 60 percent of the cost of its services.
For wastewater, the second half of the proposed rate increase is scheduled for Sept. 4.
The remaining 40 percent deficiency in the cost of service is scheduled to be discussed by the CPUC in the first quarter of fiscal year 2010, Madan said.
The CPUC will examine revenue enhancement activities to cover the remaining 40 percent.
The CPUC authorized the increases in CUC’s wastewater rate to cover 30 percent of the anticipated wastewater revenue deficiency and these rates will take effect on Sept. 4, 2009.
Georgetown was tasked to file a report on interim lifeline rates for water and wastewater service to assist low income customers.
The interim lifeline rates should be prepared for the CPUC’s consideration during its August regulatory session in anticipation of the Sept. 4 second phase wastewater rate increase.
In an interview, CUC deputy director for water and wastewater division Bruce Megarr said Georgetown’s recommendation is one of the options CUC is considering to address its $5.99 million water revenue deficit.
While no one likes a rate increase, he said CUC has to meet its duties under the federal stipulated orders and will continue to protect the environment and provide a quality supply of water.
The orders mandate CUC to establish rates, install meters, bill and collect fees in a fair manner so that it will be financially independent by Oct. 1, 2009, he added.
Madan said the current rates are 40 percent below the actual costs for providing water and wastewater services.
“This current discount to cost represents, we feel, a surrogate for a lifeline rate,” he said.
The discount on Guam, which is approximately 45 percent, is the same discount to cost that current water and wastewater customers are receiving on Saipan, he added.
According to Madan, Saipan has an inverted rate structure for water and wastewater rates that provide significant discounts for the initial block of usage.
Megarr said the wastewater rates are currently 70 percent below cost.
“I want the customer to know about the current evaluation. We intend to minimize cost and recently even combined the functions of the repair units of water and wastewater to allow us greater flexibility in terms of dealing with equipment value,” he said.
