Businesses closing, people relocating

Criselda B. Hernandez
For a 46-year-old mother of two, receiving a power bill of US$1035 for June was a big surprise, considering that their previous monthly billings ranged only from US$70 to US$100 for a small household with one TV, one radio, a microwave oven and an air-conditioning unit, which they barely use to save power.

She disputed the amount which the government-controlled Commonwealth Utilities Corp (CUC) adjusted immediately.

“I thought everything would be okay until I went to open my mailbox the following month and found out they had billed us US$34,688.21 for power in July,” the mother said in an interview with ISLANDS BUSINESS.

“I almost fainted. How could that be? From US$70 to over US$34,000? I didn’t have anyone to turn to and I disputed the amount, again.”

CUC blamed the incident on “human error” and not on its computerised billing system.

It said an employee might have erred in reading the power meter. CUC adjusted the reading right away. The same household used to pay only up to US$56 in monthly power bills before CUC decided to hike its power rate by up to 100 percent on July 22, 2006.

“Our household has been doing a lot of power and water conservation. We seldom use our aircon. We no longer water the plant as often as we used to and we try to just wipe the car instead of washing it,” the mother said.

But this family’s unfortunate experience pales in comparison to many others who—because of exorbitant power rates—were forced to leave the Northern Mariana Islands (CNMI) and relocate to Guam or the US mainland, or shut down their business in the CNMI.

The exodus of local residents, documented in a recent 64-page study by Northern Marianas College students, was one of the four major “effects” of the increase in power rates.  The other three are business closures, foreign investors discouraged from investing in the CNMI, and people changing their lifestyles.

Compounding the problem of increased power rates are the rolling blackouts due to outdated infrastructure, CUC’s lack of fuel to run the power plants because of its financial problems, or typhoons and other glitches.

A majority or 44 percent of the 200 survey respondents said electric bills they now pay are between US$100 and US$200, and 28 percent between US$300 and US$400. The study, conducted by the Current Issues class students of Sam McPhetres, who is also a CNMI historian, said 41 percent of the respondents are thinking of, or have considered, relocating due to high cost of power, and 59 percent are still hopeful the issue will be resolved.

Businesses surveyed said the power rates resulted in higher costs of merchandise. The rolling power outages, as well as the increase in minimum wage, are taking their toll on business operations.

The NMC study said as a result of high power rates, private schools’ enrolment will go down while public schools’ enrolment will go up, and more tuition hikes are to be expected. The public school system, the government entity that consumes the largest amount of power, may also have to reduce programmes like the Head Start and Kindergarten programmes, according to the study. Other government agencies may also have to reduce or shut down their operations.

The CNMI government’s austerity Fridays, which was instituted to save government money, are now also impacting health services. 

“Staff, doctors and nurses are leaving and not being replaced. Austerity holidays are hurting outpatient care,” said the study.

Even the most helpless of residents of the CNMI, like a woman bound to a wheelchair, are not spared from the effects of the high power rates.

Due to her inability to pay, the woman with disability got her power disconnected and subsequently could not charge her only mode of transportation—her electric wheelchair.

Before July 22, 2006, CUC consumers were paying fuel surcharge of 3.5 cents per kilowatt an hour, on top of the basic power rate of 11 cents per kilowatt hour for residential, and 16 cents per kwh for commercial and government customers.

Due to the rate hike, CUC started charging consumers extra for fuel based on how much it purchased the commodity.

For August, residential customers bought electricity at 23.9 cents per kwh for the first 500 kwh only. Their rates go higher as they use more power. They must also pay a fixed monthly charge of US$5.60 for their monthly customer charges. Commercial customers pay 30.9 cents per kwh while the government is charged 31.4 cents per kwh.

The July 2006 power rate hike—the first one in 17 years in the CNMI—was a result of high fuel costs, among other things.

The previous administration used to subsidise CUC’s fuel expenses by up to US$2 million every month. Now, CUC pays for its own fuel expenses and the payment is derived from the higher rates imposed on its business, residential and government customers.

ALTERNATIVE ENERGY, POWER PRIVATISATION

Because the crisis in utility costs affects all sectors, the NMC study discussed alternative energy sources the government can start working on like wind, solar, geothermal, tidal and nuclear. In fact, 99 percent of the survey respondents say the CNMI government should find alternative energy solutions.

Governor Benigno R. Fitial, in a press briefing, announced that a San Francisco-based firm, Gold Pact, intends to implement a renewable power system in the CNMI.

Through an Internet conference, Gold Pact point man Craig Mead told the governor and media that major US investors are looking for a site to develop energy sources powered by wind, ethanol, hydrogen and geothermal energy.

He said they are willing to pour in US$300 million to US$500 million over the next five years in the CNMI to set up the proposed alternative energy plants.

The governor and Mead said the investors want to lease Goat Island, a small uninhabited island, to develop the proposed wind farm. The investors also plan to form a partnership with Northern Marianas College to develop a proposed alternative energy sources.

The Fitial Administration is also pursuing the long-delayed privatisation of CUC’s power plant operation. However, an ongoing procurement mess has snagged the multi-million project. On July 20, the Office of the Public Auditor issued a decision cancelling the procurement process involving CUC’s power privatisation request because of non-compliance with the CNMI Procurement Rules and Regulations.

The procurement violations included inaction by key government officials on a protest filed by one of the bidders which is Telesource CNMI Inc., the “closed” nature of the solicitation and the non-refundable fees totalling US$76,000 that limit the level of competition contrary to a “requirement of full and open competition.”

The Fitial Administration said it would pursue the power privatisation project although it has yet to decide whether this would be done through the issuance of a new RFP. Previous administrations also attempted to privatise CUC but those were also entangled in procurement controversies that included alleged corruptions involving key government officials.

THE BRIGHT SIDE OF THINGS

Besides high power costs, CUC and some of its business and residential customers also have to deal with a rash of power cable thefts—the latest and so far the biggest of which was the theft of an estimated US$400,000 worth of copper wire and aluminum conduits from a defunct mall that left the Department of Public Works field office without power.

The federal government-operated American Memorial Park has also started investigation into the disappearance of US$4500 worth of stainless steel cable.

The copper wire thefts were so pervasive that they cause power outages in villages, and even affecting the operations of CUC, including its power plants. While individuals have been arrested in connection with the theft cases, the stealing continues.

But if there’s one good thing about the higher power rates, it is a change in peoples’ attitudes toward power and water conservation.

Many are now using energy-efficient fluorescent bulbs to replace incandescent bulbs, and are now either limiting or eliminating altogether the use of energy consuming washing machines, water heaters and air-conditioning units.

The McDonald’s stores on Saipan, for example, changed their lights from regular light bulbs that eat up a lot of wattage to low wattage fluorescent light bulbs. In the parking lot alone, McDonald’s was able to keep the brightness but with lower electricity usage—from 1000 watts to 400 watts. Besides saving dollars in high power rates, these energy conservation measures are also seen as a way to protect the environment and combat global warming which islands communities like the CNMI cannot ignore now.