THE Saipan Chamber of Commerce is greatly disappointed

(101507 MV)

THE Saipan Chamber of Commerce is greatly disappointed with the legislature’s recent override of Governor Fitial’s veto of H.B. 15-246. The legislators’ transparent election year move to gain votes cannot be ignored. In the absence of any credible and well-reasoned explanation for both the initial passage, and subsequent veto override, of H.B. 15-246, we must assume that this is an unfortunate example of election-year pandering to the electorate. How can lawmakers believe this is any solution? CUC has clearly explained the consequences of such an override: the utility will be unable to pay its fuel bill, thus assuring regular black outs. CUC estimates 60 days of blackouts in a year, because of inability to pay for fuel. That equates to four hours a day, every day, for a year. And our elected officials have ignored this warning, to the detriment of us all. Our power crisis did not occur overnight and neither will it be quickly resolved. It is the legislators’ job, along with the administration and CUC, to work through the problem (which has been around for years), not to brush it aside. CUC and the administration had made the hard decision to charge the businesses and residents what it cost to produce power. No one, including chamber members, is happy with higher power rates, but we understand that a business cannot sell a service or product below its cost and expect to pay its bills and staff. We do not expect CUC to do this either. In fact, the Legislature doesn’t really expect this. The legislation provides that “the electric fuel rates may fluctuate depending on the actual cost of fuel.” Isn’t that what was happening already? This is not to excuse CUC. There are many steps they must take to reduce the costs of operations. CUC should be given realistic performance and operating goals and should be required to meet them. But the fact remains that they cannot sell a kilowatt hour for less than the actual cost of a kilowatt hour and still remain viable. And we must have reliable power on this island, for the health and safety of our residents, as well as to provide the backbone for business and future investments. If the Legislature believes that CUC is overstaffed or mismanaged, then they should address the real issue, not the symptom, which is the high cost. If they do not believe that mismanagement or overstaffing is the problem, then they should explain to all of us how they expect CUC to continue its operations while losing money on every kilowatt hour of electricity sold, and with a massive and seriously overdue government receivable on its books. CUC must, unfortunately, adapt to legislative meddling and become creative about how best to provide consistent power even as our elected officials play election year games. The chamber notes that H.B. 15-246 only addresses residential power rates. We suggest that CUC immediately increase its government power rates in an amount sufficient to offset the losses that will be incurred because of this legislation. Then there will be no need for rolling blackouts of any sort, and no “exorbitant” (to use the legislators’ word) residential rates. Reducing CUC rates may appear to assist the people, but this is a case of “penny wise, dollar foolish.” It is a short-sighted fix that will actually hurt people financially in the long-run. Consistent blackouts will force businesses, government offices and schools to close, reduce hours of operation, and reduce staffing. Many employees can expect reduced hours, reduced wages, and the possibility of further businesses closing. Thus, people now trying to make ends meet will become unemployed. Regular power outages will have a negative impact on our tourist industry. And closer to home, power outages damage and shorten the lifespan of electrical appliances. The Legislature wants businesses to hire more local workers, and the chamber supports this effort wholeheartedly. However, legislation such as this only hurts the ability of businesses to retain their current employees, let alone hire more staff. This override also sends the wrong message to potential investors, who look to a community’s ability to provide consistent utilities as a major consideration. The chamber is keenly aware of the hardships Saipan residents are experiencing due to the increase in CUC rates. Businesses are facing the same hardships. It is the duty of our elected officials to provide a reliable infrastructure for the CNMI. Bringing CUC up to efficient and effective operating standards will not be an easy task, but our legislators and administration must do the necessary hard work. We do not want a shoddy “band-aid” approach that is only undertaken to get votes. We are tired of excuses and we are tired of empty promises. We want substance, a real effort, and action to fix this problem. The Saipan Chamber of Commerce supports CUC rates that reflect the actual cost of producing electricity. The chamber also believes that it is long past the time for CUC problems to be faced honestly, and for the administration to take whatever steps are necessary to provide a reliable power infrastructure for the CNMI, starting immediately.JUAN T. GUERRERO PresidentSaipan Chamber of CommerceLawmakers defend CUC bill override
TWO House lawmakers say election year has nothing to do with their decision to override the governor’s veto of a bill lowering residential electric rates. The new law, according to the Commonwealth Utilities Corp., could mean more blackouts in the months ahead if their projected revenue loss of more than $8 million is not replenished.Vice Speaker Justo S. Quitugua, D-Saipan, said CUC’s “scare tactics” are already underway.“The power outages have begun even before we reduced the rates,” he said.Quitugua and House Minority Leader Arnold I. Palacios, R-Saipan, said while it is true that the override came just barely a month before the Nov. 3 midterm elections, it wasn’t intentional and that they worked on the measure as early as last year.“There is no electioneering here. We gave the administration time to decide on this issue,” Palacios said, adding that they were hoping that the administration would be able to form a board for the Public Utilities Commission, but this has yet to happenPress Secretary Charles P. Reyes Jr., who earlier asked the Legislature not to politicize the issue of electric rates, said the people will have to decide on Nov. 3.Palacios, the principal author of the bill, H.B. 15-246, introduced it on April 4.The House passed it on May 29 and the Senate on Aug. 16.On Sept. 14, Governor Benigno R. Fitial vetoed the bill, saying it would further destabilize CUC’s financial situation.He noted that the bill will only benefit residential customers and not the government or commercial establishments.Palacios said he was told that CUC’s budget for fiscal year 2008 will reach $117 million. Of this amount, he said $15 million will go to personnel expense and the rest to its operations budget, including fuel purchases.However, he said CUC hasn’t been able to submit to the Legislature any breakdown of its proposed budget.“The CUC management must give a proper account of how it spends it earnings,” said Palacios. “It’s not on fuel alone that they spend so much. They keep on hiring consultants. We don’t know how much these consultants are getting paid.”“They have order parts as far back as six years ago and some of those parts haven’t arrived yet. No one is making them accountable for their actions,” he added.According to Palacios, CUC hired at least four consultants in recent months including the Philippine-based Delgado & Associates, Quantum Consultants based in the U.S. and Economists.com, which is also based in the U.S.Palacios said CUC should be more transparent in its dealings and not just blame its financial problems on the rising cost of imported fuel.