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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