KOROR (Palau Horizon) — Palau Public Utilities Corp. is asking for a $1.3 million subsidy from the national government to support the operating costs of the three outlying state power plants.
In a letter, PPUC Chairman Roman Yano “reminded” President Tommy Remengesau that the corporation faces a $855,785 revenue shortfall for fiscal year 2003 due to the costs of maintaining the three state power plants.
Yano said the power plants were established with the “common understanding” that their operations would be financed by the national government.
Yano said PPUC also has unfunded capital improvement projects requiring $1.3 million.
In April, PPUC restored the 3 cent per kilowatt power rate it reduced last year, citing the operational costs of the power plants in Peleliu, Angaur and Kayangel.
Revenue shortfall for Peleliu was estimated to reach $409,371; in Angaur, $255,691; and in Kayangel, $190,723.
Yano made the request in response to the directive issued by the president recently in accordance with the Budget Based Performance Act of 2001.
Yano earlier sought subsidy that would enable PPUC to maintain the existing power rates.
“The corporation had to roll back the 3 cents energy credit to residential customers because the subsidy requirement was not satisfied in FY 2002. The result was an increase of residential rates from the minimum of 7 cents to 9 cents. Since then and based on our experience with outlying states operations, the revenue shortfall amount has increased dramatically,” Yano said.
He said the subsidy will allow the corporation to again reduce its power rates.
“We need this subsidy because the last thing this corporation wants to do…is to raise the rates for the residential customers at a time of economic slump affecting everyone in the country. We all want to be able to reduce the rates once again to their previous lows and still meet our obligations under (the law),” Yano said.
PPUC has also expressed concern about the 20-year-old main generators of the Aimeliik and Koror power plants, saying they should be replaced.
However, this “will take upwards of $25 million to replace. Current revenue shortfall and subsidy requirements need not add or stand in the way of the steps and decisions we must make to meet our short and long term legal responsibilities as a public corporation,” Yano said.
