Jeanne H. Rayphand, in her letter to the Commonwealth Public Utilities Commission, said in Dec. 2010 the rate for electricity in Hawaii was 28.1 cents per kwh while the U.S. average was 11.58 cents per kWh.
“We are already paying approximately 130 percent of what Hawaii pays and, with the proposed increase in the base rate, our rate will jump to approximately 15 percent of what Hawaii pays,” she said.
During the public hearing on Monday, Economists.com, CUC’s rate and financial consultant, confirmed that the local rate for residential customers is much higher compared to Guam, Oahu and Maui in Hawaii.
In its presentation, Economists.com said CUC’s residential rate is 0.3765 per kwh compared to Guam’s 0.2; Oahu, 0.3034; and Maui, 0.3558.
But CPUC’s consultant, Georgetown Consulting Group explained that fuel on Guam is cheaper compared to the CNMI.
CUC chief financial officer Charles H. Warren said utility rates are set after considering many different factors, including cost-recovery.
He said in the CNMI, the average residential household uses about 500 kwh of electricity each month.
In recognition of the low average household income, he said the electricity base rate for 500 kwh and lower is set significantly below the cost of providing service.
In 2006, he added, CUC implemented a “lifeline rate” which lowered the base electric rate for residential customers consuming less than 500 kwh every month.
These costs, he added, are shifted to residential customers consuming over 2,000 kwh every month.
When asked why residential users are charged different rates, Warren said one of the objectives of CUC in rate setting is to encourage conservation.
“Since the average household in the CNMI uses about 500 kwh every month the rates are designed to encourage those who use a great deal more to strive to conserve,” he said.
According to Warren, CUC strives to develop rates that are fair and reasonable for the vast majority of its customers.
CUC is not penalizing large families using more electricity, he added.
He said the cost to develop and maintain a system that sets rates based on the actual number of inhabitants of a household at any particular time would far exceed any possible benefit, and would be extremely complex to administer.
Warren reiterated that the government’s late payment of its utility bills does not affect the base rate calculations.
CUC said it had yet to collect $5.8 million as of Monday.
