This was the recommendation of the Commonwealth Utilities Corp. and the Georgetown Consulting Group, an independent regulatory consultant of CPUC.
In its stipulation dated June 3, CUC and Georgetown said a lifeline tariff will be prepared for CPUC consideration and implementation.
CUC and Georgetown are preparing a full cost of service study which is expected to be completed once CUC’s wastewater system attains financial independence.
They also proposed an interim water and wastewater lifeline rates for CPUC’s consideration during its August regulatory session.
The lifeline rate is designed for low-income households who will be charged lower water and wastewater rates.
The report of CUC and Georgetown did not mention the formula for the lifeline rate.
They also recommended that CPUC authorize the increases in CUC’s wastewater rates that will take effect on July 1.
This will cover 30 percent of the anticipated wastewater revenue deficiency and the rates that will take effect on Sept. 4, 2009, offset by any substitute funds tendered by CNMI government and other entities.
In the proposed wastewater rates, the residential customers will pay a monthly service charge of $5.60 starting June 5; and $8.20 starting Sept. 4.
The current rate is $3.
Residential customers — metered or estimated — will be charged $0.93 starting June 5, and $1.37 starting Sept. 4, for those with over 5,000 gallons of consumption.
The remaining revenue deficiency will be examined by CPUC during the first quarter of fiscal year 2010 to determine what combination of rate relief and revenue enhancement activities would be reasonable and necessary to fund the deficiency.
CUC and Georgetown said the unmetered and unbilled service provided to commercial wastewater customers is part of a much broader concern about deficiency in CUC’s revenue cycle.
The federal stipulated orders mandate that CUC establish rates and collect fees in a fair manner so that it will be financially independent by Oct. 1, 2009.
However, CUC said its ability to meet its duties under the federal stipulated orders would be materially impaired by its inability to implement the proposed wastewater rate increase on or before July 1, 2009.
Failure to comply with the stipulated orders, CUC added, could result in substantial additional costs to its customers.
For instance, CUC said, if the federal court took control of CUC and its finances, “putting in place an expensive receiver and technical advisors, payment of such additional costs would be required of the customers on top of required rate increases.”
