CEO Kyota says it poses a “real and imminent threat” to PPUC
The Palau Public Utilities Corporation (PPUC) CEO Frank Kyota has written a letter to both Senate President Hokkons Baules and House Speaker Sabino Anastacio expressing his concerns about the recently passed FY 2024 Unified Budget Law, which amends Title 37 PNC, Section 412.
The law prohibits PPUC from charging customers monthly, billing, or fixed service fees. Late payment charges and disconnection/reconnection fees are not included.
The law also demands that PPUC calculate the amount that would have been used to pay the KASP (Koror-Airai Sanitation project) loan and reduce the amount from the wastewater rates. The law further waives the administrative rules (APA) for rate changes for this new reduced rate to be implemented by November 1, 2023.
Kyota argues that the amendment poses a “real and imminent threat” to PPUC’s financial viability. He says that removing regular service fees will create an unsustainable financial loss for PPUC and require expensive changes to the billing system. He also argues that removing the fixed service charges will result in revenue loss to PPUC, affecting its ability to cover its administrative overhead costs and fixed expenses necessary to support the delivery of utility services to the public.
“Removing the fixed service service charges (service delivery as we call it) will result in an over $1,000,000 annual revenue loss until such time as those costs can be included in a volume-based rate,” added PPUC.
“It is possible that the replacement of the entire network will be required, depending on the assessment of the expert. However, even if the cost of hiring a company to perform the necessary changes to accommodate the requirements of the law turns out not to be a major issue, we still cannot assure that it can be carried out this year,” added Kyota.
During the budget deliberation, PPUC had written a letter outlining their concerns with these amendments in September. Still, Olbiil Era Kelulau passed the provisions without changes, and President Surangel Whipps Jr. signed them into law on September 30, 2023.
The law mandates that the new rates showing recalculation and reduction of KASP loan payment be filed by November 1, 2023, which would be within 30 days.