By Bryan Manabat
[email protected]
Variety News Staff
COMMONWEALTH Utilities Corporation Executive Director Kevin Watson said Friday that the newly approved Fuel Adjustment Charge increase will “slow the bleeding” but will not resolve CUC’s long-standing financial strain, even as the Commonwealth Public Utilities Commission defended the decision as necessary amid global fuel price spikes and a year-long freeze on rate adjustments.
The CPUC on Friday approved CUC’s March 31 petition to raise the FAC from 24.5 cents to 44.489 cents per kilowatt-hour, effective May 15. The rate reflects April’s global ultra-low sulfur diesel prices, which doubled from March.
The FAC covers fuel and fuel-related purchases and appears on customers’ monthly bills. The base rate, which funds personnel, operations, capital projects and debt service, has not increased since April 2014.
The increase follows a series of adjustments after the CPUC lifted the FAC tariff freeze on March 16, allowing CUC to raise the rate from 19.706 cents to 22.075 cents per kWh. CUC later increased it to 24.500 cents effective April 1, before Friday’s jump to 44.489 cents.
CPUC Chairman Jack Angello said the commission acted after reviewing fuel price data, CUC’s financials, and consultant recommendations. “After careful consideration of all the facts and figures surrounding the volatility of rising Mobil diesel fuel and lube oil costs for CUC’s generators, the CPUC approved by majority vote the increase in the FAC rate,” Angello said. He added that public notices were issued ahead of the vote, but no comments were received until after the decision was made.
Angello noted that the FAC had been frozen since March 2025 despite rising petroleum costs driven by the conflict in the Middle East. “The May 15 increase in the FAC rate was overdue,” he said. “We should all hope that this conflict concludes and that oil prices return soon to a more reasonable level.”
Watson said the increase was unavoidable if CUC is to continue paying Mobil Oil Marianas for fuel deliveries. “If we don’t have the funds to pay Mobil, they’re not going to unload the fuel when they pull up to our dock,” he said. “Then we won’t have diesel to power the engines.”
He said the jump from 24 to 44 cents reflects CUC’s reality: fuel costs have surged from $4.5 million to more than $8 million per month, leaving a $4 million gap that CUC has been absorbing through deferred maintenance and internal transfers. “This is just putting a band-aid on,” Watson said. “It will slow the bleeding, but it’s not going to stop it.”
Watson also confirmed that CUC has not yet petitioned for the May FAC, calculated at 60.481 cents per kWh, though it was discussed with commissioners.
He emphasized that the increase affects only the FAC, not the base rate or water charges. “The only thing that will double is the FAC,” he said. “The base rate stays the same. Water rate stays the same. But yes — it’s a major impact. We will all feel it.”
Public frustration
News of the FAC increase sparked immediate frustration across social media, where residents described the hike as “unbearable,” “poorly timed,” and “another hit to families already struggling after the typhoon.” Some commenters questioned why the FAC had been frozen for a year despite rising fuel costs, while others criticized the lack of public engagement before the vote.
Many residents expressed concern about monthly bills doubling, even after Watson clarified that only the FAC portion — not the entire bill — would increase.
Long-term rate overhaul still pending
Watson said CUC has petitioned to remove the bad-debt component from the FAC, calling it negligible — “less than a tenth of a penny” — and unnecessary in the monthly fuel formula. That cost, along with the electric charge for water production, would instead be absorbed into the base rate once the CPUC completes its ongoing multi-year base-rate review.
The proposed base rate adjustment, now before a hearing officer, is expected to phase in over five years. Watson said CUC’s revenue will still lag behind expenses until the final year. “We’ve been operating with revenues less than expenses for many years,” he said. “That’s why we’re in a position of having 40- to 50-year-old engines and no reserve when a typhoon hits.”
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.
