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Commonwealth Utilities Corporation Alan W. Fletcher Executive Director.

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Presentation on theme: "Commonwealth Utilities Corporation Alan W. Fletcher Executive Director."— Presentation transcript:

1 Commonwealth Utilities Corporation Alan W. Fletcher Executive Director

2 Brief History CUC formed in late 1980’s. Historically rates have not recovered costs. Early – Fuel Prices Rise – Financial & Operational Collapse. ◦Rolling blackouts, sewerage overflows, acute public health violations & risks – CNMI Government, Department of Interior–Office of Insular Affairs Provide Assistance – USEPA Sues for Violations of Safe Drinking Water & Clean Water Act(s).

3 Driving Factors 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.

4 Today: Cash Flow Remains King 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.

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6 Rate Comparison

7 Renewable & Base- Load Energy Planning 70% of the cost of power is diesel fuel. Converting to another source of base- load generation has the greatest potential for lowering costs to consumers.

8 Renewable Energy Initiatives Geothermal Feasibility Integrated Resource Plan (“IRP”) Photovoltaic Solar Energy

9 Geothermal 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. 9

10 IRP - Energy Planning “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

11 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.

12 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.

13 Photovoltaic Solar Project 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.

14 Large Commercial Incentive Rate

15 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.

16 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 = ¢ kWh 4-Year duration / Contract required.

17 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.

18 Commonwealth Utilities Corp 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.


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