22 Jan 2018
- By Junhan B. Todiño – [email protected] – Variety News Staff
COMMONWEALTH Utilities Corp. chief financial officer Tony Castro said CUC is confronted with three major fiscal challenges.
In his report to the CUC board, Castro said these challenges include the $3 million annual payment for transportation costs, cargo insurance, ocean loss, fixed add-on, wharfage fees, oil spill tax, beautification tax and gross receipt tax absorbed by CUC for the Mobil fuel contract from May 2014 to April 2020; the $48.3 million in unpaid utility bills of the CNMI government; and excessive overtime due to unfilled full-time employee slots and a reduction in the number of contract workers.
But CUC’s fiscal year 2018 revenue increased by 29 percent in October; 26 percent in November; and 20 percent in December compared to the same months in fiscal year 2017, Castro said.
“This is a positive indication that more customers are hooking up to CUC and the demand for utilities has increased,” he told the board.
Castro said CUC collected 87 percent of its revenue in fiscal year 2017 from the residential and commercial sectors while most of the uncollected revenue is from CNMI government agencies.
Concerning the overtime expenses in fiscal year 2017, he said CUC spent $942,063.
The total overtime for the first quarter of fiscal year 2018 was $221,012 of which $112,073 was for power generation, Castro said, adding that this was attributed to the continuous production efforts and the reduced number of workers.
In fiscal year 2018 so far, he said, the overtime expenses for administration was $7,671; power distribution, $29,527; generation, $112,073; wastewater, $5,390; water/engineering, $23,980; Rota, $24,575; Tinian, $1,111; and CFO, $16,684.
CUC travel costs in fiscal year 2017, Castro said, amounted to $86,815.30.
For the first quarter of fiscal year 2018, the travel amount was $10,122 which included $2,000 for water; $3,854, administration; $1,408, board of directors; $1,298, CFO; $371, engineering for water; $2,018, distribution; $1,283, power generation; Tinian, $15; and Rota, $422.
Castro said CUC is also developing a new energy sector to meet the growing demands of the local economy, adding that the initiatives led by CUC Executive Director Gary Camacho focus on increasing local capacity through solar power, geothermal and fossil fuel energy expansion.
Castro said his office is engaged in analyzing different funding options, revenue expectations and billing challenges to meet the need for expansion.
“It’s imperative that the financial condition of the corporation depicted in the audited financial statements be accurate and reflect the corporation’s expectations to meet customer demand for utility service,” he said.
Castro said CUC is giving team members the resources, training and learning opportunities they need to be safe, engaged and successful in their jobs while cultivating a culture to attract and retain new talent.
Currently, he said, his office is conducting a Microsoft dynamic GP financial system upgrade of their server and software.
He said the fiscal year 2016 audit of their financial statement is already 99 percent complete.
Castro said they are also preparing for the monthly financial statement, including the balance sheet, income statement and other financial information as well as an accountability review of CUC’s fixed assets.
Source: Marianas Variety : http://www.mvariety.com/cnmi/cnmi-news/local/101663-official-cuc-faces-3-major-financial-challenges