The following op-ed was submitted by Analee Villagomez of Finasisu Village. Op-eds reflect the views of their authors and are published as submitted.
We, the undersigned residents of the Commonwealth of the Northern Mariana Islands (CNMI), are deeply concerned about the extremely high cost of utilities, particularly electricity, in the CNMI. We strongly urge our elected and appointed leaders to take immediate action to address this alarming issue, which is affecting the health, welfare, and livelihoods of every person on our islands.
For 46 years, the Commonwealth Utilities Corporation (CUC), an autonomous agency of the CNMI government, has operated as the sole provider of public utilities—water, power, and wastewater. As a monopoly, CUC sets utility rates without meaningful competition or oversight. Although the CNMI Public Utilities Commission (PUC) was established to regulate these rates and consumer charges, it has had minimal impact, leaving residents and businesses burdened with unmanageable bills due to CUC’s unchecked authority in determining charges.
So, whenever there is any increase made with respect to the electricity rates that CUC assesses all CNMI consumers, utility consumers cannot help but suspect that the CUC power rate increases very likely stem from CUC’s inability to “rein in” the utility’s high operational expenses, unusually high salaries for its executive employees and related financial largesse and activities. Those practices and expenses, particularly its extremely high operational costs, continue unabated. Those unchecked financial practices are truly astounding for a very small jurisdiction like the CNMI.
Such “overspending” by CUC is exacerbated when one considers the millions of dollars in federal grant assistance that CUC has been receiving from the U.S. Government every year over the past forty years — both for the general operations of CUC and for needed utility infrastructure and other capital improvements. Despite this assistance, CUC’s infrastructure continues to dilapidate due to mismanagement and lack of proper oversight and accountability.
According to the U.S. Census Bureau’s Island Area Census conducted in 2019, the poverty rate in the CNMI was 38%. With the recent economic downturn and exodus of local residents seeking better opportunities elsewhere, this amount has changed since then. In fact, the CNMI is the most disadvantaged and underserved of all U.S. territories! While families struggle to afford basic necessities, and small businesses teeter on the brink of closure, CUC continues to operate without accountability. This is especially troubling given the millions of dollars in federal grants and local revenue it receives, which should be used to reduce costs and improve infrastructure, not perpetuate inefficiency, mismanagement, or enrich the select few at the cost of the People.
We can understand that an “insular area” out here in the Pacific, like the CNMI, is entirely dependent on petroleum fuel being shipped to the CNMI by a single fuel supplier based in Singapore. But on top of the actual fuel charges being assessed by the fuel supplier and the associated fuel shipping costs, CUC implemented a second utility charge about a decade ago which it calls a so-called “Fuel Adjustment Charge (FAC).” This was previously referred to as LEAC or “Levelized Electric Adjustment Charge. This charge (FAC or LEAC), turns out in practice by CUC as the charge that would take care of most of CUC’s financial needs, particularly its operational costs and high management salaries, perks and benefits.
All utility customers are aware of this additional, monstrous FAC charge, because it is at least 250% as much as the actual fuel generation and distribution cost being assessed by the utility customer. For example, if your regular monthly electricity usage is, say, $350.00, the FAC charge that is tacked on to the customer’s power billing is roughly $700.00. The customer, therefore, has to pay CUC a total electricity fee of $1,000.00. Such outrageous Fuel Adjustment Charge is then added on to the actual fuel and fuel generation and distribution charges.
The total of the two charges (actual cost and FAC) are then billed to every business and private power consumer in the CNMI, resulting in an outrageously high utility billing for every utility consumer in the CNMI–every month. But on top of that outrageous billing, whenever a private or business consumer does not pay his/her/its utility bill on time, a customer’s utility service is quickly disconnected by CUC.
The only apparent exception from utility disconnection for non-payment of utility billing by the CUC has been the CNMI Government, CUC’s biggest utility user. Why? Because CUC’s board and management usually know-tows to the CNMI Government. One of the best examples of the CNMI Government’s indirect control over CUC took place just recently when CUC agreed to offset more than $10 million dollars of CNMI Government power charges that the government has failed to pay CUC over the past several years. Is this fair? Of course not. But the game of “Scratch My Back, and I’ll Scratch Your Back” is very much alive and well today between the CNMI Government and CUC, as has been the case for the past decade or two.
The offset of the CNMI Government’s delinquent billing by CUC was assertedly a “win-win” situation for the CNMI Government and CUC. But there is no question that such offset was a “loss-loss” event for all non-government utility consumers.
Before we became a U.S. commonwealth—during the Naval and Trust Territory administrations–, the government was operating the public utility agency in the islands. It was charging utility customers at rates that were very reasonable. Some of us would probably say that the trusteeship government back then was providing such utility services at a subsidized rate, which is probably true because the minimum wage for most trusteeship government employees back then was less than one dollar ($1.00) per hour.
The irony with the trusteeship administration’s low utility charges being subsidized by the government in the days before commonwealth self-government began is that, today and for the past ten-twenty years or so, we the private consumers in the CNMI have been the ones subsidizing a substantially large percentage of CUC’s overall cost of operations and charges. This is so, notwithstanding the millions and millions of dollars in federal grant assistance that the CUC has been receiving from the federal government over the past several decades. Why is this now the case? Why are the CNMI utility consumers subsidizing a substantial portion of CUC’s utility operations? What must and can be done to stop the practice of the utility consumers subsidizing a substantial portion of CUC’s operational and administrative costs?
To the question, why is this now the case? The answer is: “Because, unlike private businesses, the CUC as a monopoly has decided that it can charge whatever utility rates and “fuel adjustment charges” (FAC) it unilaterally decides to set—with impunity. The CPUC, which is the CUC’s rate-setting and oversight agency, most of the time has been simply “rubber stamping” its approval to almost every CUC request to increase the Fuel Adjustment Charges (FAC) being assessed the consumer–with very little scrutiny and due diligence.
The result of this superficial scrutiny by the CPUC of most if not all of the proposed CUC rate-increase petitions over the years has been to ultimately “pass on” to CNMI utility consumers most of the expenses that CUC incurs but are not covered by federal grants or by the actual utility charges assessed a customer. Many of these CUC expenses, we believe, are not related to the true costs of utility power. Indeed, we would surmise that almost all of CUC’s expenditures—whether related to power generation and distribution or for administrative expenses, salaries and other perks—are tacked on to and become a part of the Fuel Adjustment Charge (FAC) that the utility consumer is unwittingly made to pay; otherwise their power utility would be disconnected.
So, the powers that be, i.e., the CNMI executive and legislative branches ultimately has to and must address this major utility billing issue that the CUC, in its wisdom, has decided to foist on all CUC power consumers. Our elected leaders have a solemn duty and obligation to look into this major consumer issue that has been seriously and adversely affecting literally every person’s livelihood and general welfare. As the saying goes: “Enough is enough!” CUC was established to serve the public, not to be the conduit that makes the lives of its citizens unbearable.
This is an election year again, and the people are watching whether our elected leaders have the guts to address and resolve this important consumer issue that is affecting their lives and general welfare.
Yours truly,
Analee Villagomez
Finasisu (historically named As Perdido) Village
