Commonwealth Utilities
Corporation
Alan W. Fletcher
Executive Director

CUC formed in late 1980’s.

Historically rates have not recovered costs.

Early 2004-2005 – Fuel Prices Rise.

2007-2009 – Financial & Operational Collapse.
◦ Rolling blackouts, sewerage overflows, acute public
health violations & risks.

2009 – CNMI Government, Department of
Interior–Office of Insular Affairs Provide
Assistance.

2009 – USEPA Sues for Violations of Safe
Drinking Water & Clean Water Act(s).
Brief History

100% Diesel fuel power generation

Volatility of prices in the oil markets

Serving disconnected island communities

Dilapidated power generation and
distribution infrastructure due to a lack of
reinvestment over time

Years of poor financial performance,
including rates that have not recovered
the cost of service.
Driving Factors

Since 2006, CUC has accumulated near
$80,000,000 in operating losses.

Continued pressure due to non-payment
of government accounts.

Court ordered projects & reserves
compete for money.
Today: Cash Flow Remains King
CUC Cost of Fuel and Gallons Purchased FY 2003 - FY 2013
90,000,000
$4.00
80,000,000
3.55
3.44
$3.50
3.41
3.12
70,000,000
$3.00
60,000,000
$2.50
2.34
50,000,000
2.15
2.36
2.18
$2.00
40,000,000
Cost ($)
$/gal
1.61
$1.50
30,000,000
1.03
20,000,000
Gallons
$1.00
0.84
$0.50
10,000,000
0
$0.00
FY 03
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
FY 13
Rate Comparison
Pacific Islands Electric Utility
Residential Monthly Bill Comparison
500 kWh per month - Mar 2014
$/Mon
$300
$250
$200
$150
$170.89
$183.12
CUC
Oahu
$192.38
$200.79
$205.00
$207.23
ASPA
MEC
Hawaii
$234.71
$239.29
$244.21
Kauai
Molokai
Lanai
$136.63
$100
$50
$0
GPA
Maui
Renewable & BaseLoad
Energy Planning
•
70% of the cost of power is diesel fuel.
•
Converting to another source of baseload generation has the greatest
potential for lowering costs to
consumers.

Geothermal Feasibility

Integrated Resource Plan (“IRP”)

Photovoltaic Solar Energy
Renewable Energy
Initiatives

Project currently underway.

Complete deepest drilling on island, going 3X
deeper than current groundwater and injection
wells.

Confirm heat source presence.

Obtain geological information (rock type,
alteration, structural deformation, permeability).

NOTE: Required temperature of 300°F (150°C)
for viability.
Geothermal
9

“Integrated Resource Management Plan”
◦ 2013 DOI-OIA Grant.
◦ Review options for generation type and mix,
system integrity and losses, conservation
options, ownership, operating & financing
options.
◦ To determine the most cost effective mix of
energy sources
◦ Financial modeling – to fairly choose among
very different proposals
IRP - Energy Planning

Base Load Analysis and RFP
◦ Develop strategies to reduce fossil fuel
dependency, while providing reliable generation
at the least cost possible for consumers.
◦ Third-party, independent evaluator:
 Request For Proposal Design
 Scoring criteria and models
 Oversight of solicitation

Stakeholder workshops September 11.
IRP - Energy Planning

Why a stakeholder process?
◦ CUC recognizes that the views, opinions, and
concerns of our community should be taken into
account.
◦ We want to arrive at a solution that will be based
on reliable information and neutral, unbiased
decision making.
◦ A successful outcome means having broad
community endorsement and a process that is well
understood.
◦ The first step in this process is to understand the
concerns of the community and your opinion.
IRP - Energy Planning

Finalizing Power Purchase Agreement.

Considerations for completion:
◦ Final sizing to allow some net-metering
◦ Final pricing (markets more favorable
today)
◦ Final contract form
◦ Financial guarantees
 Assets now available; current financial
condition drives up pricing due to risk.
Photovoltaic Solar Project
Large Commercial
Incentive Rate

Offered to attract self-generating
businesses onto the system.

Over time, a larger customer base and
more kWh sales will spread fixed costs out
over a larger base.

Approved by CPUC May 28, 2014

Final contract and rider approval expected
September or early October 2014.
Large Commercial
Incentive Rate

Provide rate incentive to self-generating
customers to use CUC power.

Provide 8.3¢ per kWh reduction to
qualifying customers.

Based on Current LEAC = 33.426¢ kWh

4-Year duration / Contract required.
Large Commercial Incentive Rate

To Qualify:
◦ Currently self-generate >90% or more
of annual requirements.
◦ Installed capacity of >400 kW.
◦ Existing customer expansion of >200
kW, or expand hotel by 75 rooms or
greater.
◦ New commercial customers of >400 kW.
Large Commercial Incentive Rate

CUC working to overhaul utility by
stabilizing finances, replacing
dilapidated equipment, and installing
new infrastructure.

Customers have seen the successful
results of these efforts in more reliable
power, water, and wastewater services.

Remains committed to providing the best
service possible through solid planning
and engineering, and sound financial
practices.
Commonwealth Utilities Corp