SAIPAN — Rep. Vincent R. Aldan is calling for independent testing of the assumptions behind the Commonwealth Utilities Corporation’s rate study before regulators approve what could be a 68 percent increase in a representative residential bill, saying ratepayers are owed proof rather than projections.
In a public statement released Sunday, the chairman of the House Committee on Transportation and Infrastructure said CUC’s May 2025 rate study should be the beginning of the review, not the end of it.
The study models a representative residential customer using 500 kilowatt-hours of electricity and 5,000 gallons each of water and wastewater per month, with a combined current benchmark of $184.29. Under Scenario I, that bill reaches $268.65 by 2030. Under Scenario II, it rises to $258.75 in 2026, a 40.4 percent increase at that step. Under Scenario III, it reaches $310.10 by 2030, about 68 percent above the benchmark.
Aldan said the modeled bills should not be read as guaranteed maximums because the study holds the Fuel Adjustment Charge constant. The scenario tables use an FAC of about $0.21119 per kilowatt-hour, which works out to roughly $105.60 a month for a 500-kilowatt-hour customer, already included in the modeled $134.50 electric bill. The study states the FAC is assumed to be unchanging for purposes of the analysis while acknowledging it may rise or fall with world oil prices.
“The proposed base-rate structure does not eliminate the ratepayer’s exposure to future FAC changes,” Aldan said, calling for the Commonwealth Public Utilities Commission to require sensitivity analyses showing what proposed rates mean at different fuel prices.
He pointed to the consultant’s own disclaimer that the study relied extensively on data supplied by CUC and that “the integrity of the study is largely dependent upon the accuracy of this financial and volumetric data.” The power cost of service is based primarily on CUC’s staff-requested fiscal 2026 budget, which Aldan said does not automatically establish that every expenditure represents the minimum reasonable cost to ratepayers.
Several assumptions in the model drew his attention. The study forecasts $62 million in long-term electric debt in fiscal 2026 at an assumed 30-year term and 3 percent interest, with another $50 million assumed between fiscal 2031 and 2035 for projects not yet identified. On the water side, CUC identified about $124.7 million in water and $100.2 million in wastewater capital needs, roughly $224.9 million combined, and the model assumes all of it will be grant-funded. The consultant warned that if those grants do not materialize, CUC would need rate revenue and long-term debt, producing additional rate adjustments beyond those in the study.
The study also puts CUC’s non-revenue water at about 64 percent, among the highest of the Pacific utilities in its comparison, and assumes about 75 percent of that stems from under-registering meters rather than physical loss. The model assumes non-revenue water falls to 20 percent over ten years, and the consultant says the rate plan will have to be modified if that does not happen.
“Show the meter-testing data. Show the replacement program. Show actual billed-versus-produced water,” Aldan said.
He also questioned an assumption that 6.4 percent of gross revenues are uncollectible, asking for a breakdown by residential, commercial and government accounts, and the aging of those receivables, without speculating about who owes the money.
On Scenario III, which phases out the higher government water and wastewater rate over five years until government pays commercial rates by 2030, Aldan raised what he called a fairness question. The consultant identified the tradeoff directly: reducing the government rate results in significantly higher residential and commercial adjustments. Under that scenario the representative commercial bill rises from $1,027.72 to $1,784.27 a month.
Affordability was already flagged in the study itself, which calculated that the existing combined water and wastewater charge for 10,000 gallons represented about 3.47 percent of median household income, above the American Water Works Association’s definition of burdensome.
Aldan said he is not opposed to any increase. “CUC should be permitted to recover the reasonable and necessary cost of providing service. And ratepayers should be protected from paying costs that have not been demonstrated to be reasonable and necessary,” he said.
He closed with a challenge to the utility: “Before asking ratepayers to pay more, has CUC demonstrated that the amount it is asking them to pay is reasonable, necessary, and based on assumptions that can withstand independent scrutiny? If the answer is yes: show the evidence. If the answer is no: do the work first.”
The rate study was prepared by Economists.com for CUC and finalized in May 2025.
