By Bryan Manabat
[email protected]
Variety News Staff
COMMONWEALTH Utilities Corporation Chief Financial Officer Betty Terlaje warned Thursday that CUC is running out of cash and fuel, telling the utility’s board that without immediate legislative authorization to borrow money, the CNMI faces severe disruptions in power, water, wastewater, communications, and public safety systems.
“We have a timing problem, a liquidity crisis,” Terlaje said during a May 21 special board meeting called to review CUC’s financial condition and post-typhoon recovery status. She reported that CUC has incurred $18.3 million in disaster-related expenses in just 37 days, with total recovery costs expected to reach or exceed $75 million within the 90-day emergency period.
Terlaje said CUC currently has $14.5 million in unrestricted cash, but “the majority of that cash is already committed or obligated,” leaving the utility with “limited unrestricted liquidity.” Another $35 million is restricted for grant-funded projects, ARPA initiatives, customer deposits, stipulated order projects, and settlement funds. “Bottom line, available cash is insufficient to sustain operations, fuel procurement, and recovery obligations over the coming months,” she said.
Revenue has collapsed because large portions of Saipan remain unenergized and Tinian is still offline. Water revenues were significantly impacted for more than a month until 24-hour service was restored this week. Many customers are also financially affected, further reducing collections. Fuel costs are astronomical, Terlaje said, noting that the Fuel Adjustment Charge remains below the actual cost of fuel, forcing CUC to absorb millions in losses. “Every time we energize a customer, we are taking a loss,” she said.
Despite the financial strain, CUC continues restoration work. Crews have been working from 6 a.m. to 9 p.m., though hours will be reduced due to material shortages. “There has been a reduction in the number of employees on restoration,” Terlaje said. “There is a reduction in restoration hours pending the arrival of materials and a return to normal operations. Restoration responsibilities are being absorbed into regular duties for administrative and exempt employees.”
She said CUC has already delayed discretionary spending, prioritized only critical expenditures, frozen hiring, and implemented voluntary deferment of earned premium pay. But internal cuts are not enough to stabilize the utility.
Terlaje warned that the fuel crisis is now the most urgent threat. “Our fuel costs are high due to a global crisis. It is beyond CUC’s control. Without fuel, there will be no generation,” she said. “Power generation reliability depends on continuous fuel purchasing capability.”
She described the cascading consequences if CUC cannot buy fuel: “Without generation, water and sewer services will become a crisis. Critical public safety systems will be compromised. Critical facilities will not be able to operate. Communication systems will be disrupted. Healthcare and hospital services will be severely compromised. Government facilities, the airport, the seaport, and schools will be forced to self-generate until their fuel supply runs out. Economic activity will cease. Public health and safety will be threatened.”
Terlaje said the only path forward is immediate financing authority. “For CUC, we need to finalize our emergency financing strategy. We need legislative authorization to borrow funds,” she said. “That has already been prepared. We’ve engaged with banking institutions and lenders. We need to support continued operational cost controls.”
She urged the House and Senate to expedite approval of emergency financing and to appropriate sufficient funding for the government’s own electric consumption, including the under-billed Fuel Adjustment Charge.
Terlaje said the borrowed funds would allow CUC to procure fuel, continue typhoon recovery, maintain operations, and ensure vendor payment continuity. Repayment would come from future revenue recovery, Fuel Adjustment Charge collections, potential federal assistance, and FEMA reimbursements. “What we bill, we get paid 45 to 60 days after we bill,” she said. “If the reconciliation recovers under-recovered costs, then we should be able to pay for the loan.”
CUC has already requested advanced FEMA reimbursement and is meeting with the U.S. Department of the Interior and the White House Office of Management and Budget. “We will continue to stress the situation that we are in,” Terlaje said.
The CFO said: “Without additional liquidity and financing authority, CUC faces significant operational and fuel procurement risks.” The proposed financing, she said, is intended as bridge stabilization funding during the disaster recovery period and the lag in billing. “Timely financing authority is critical to maintaining utility operations, fuel procurement, and continued recovery efforts.”
“CUC remains committed to restoring and maintaining reliable utility services despite the extraordinary post-disaster financial and fuel challenges,” she said.
Bryan Manabat was a liberal arts student of Northern Marianas College where he also studied criminal justice. He is the recipient of the NMI Humanities Award as an Outstanding Teacher (Non-Classroom) in 2013, and has worked for the CNMI Motheread/Fatheread Literacy Program as lead facilitator.
