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Commonwealth Utilities Corporation

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.

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Commonwealth Utilities Corporation

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  1. Commonwealth Utilities Corporation Alan W. Fletcher Executive Director

  2. 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

  3. 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

  4. 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

  5. Rate Comparison

  6. Renewable & Base-LoadEnergy 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.

  7. Geothermal Feasibility • Integrated Resource Plan (“IRP”) • Photovoltaic Solar Energy Renewable Energy Initiatives

  8. 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

  10. 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

  11. 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

  12. 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

  13. Large CommercialIncentive Rate

  14. 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 CommercialIncentive Rate

  15. 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

  16. 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

  17. 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 planningand engineering, and sound financial practices. Commonwealth Utilities Corp

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