KOROR, Palau — The Supreme Court of Palau has dismissed a lawsuit filed by the Olbiil Era Kelulau (OEK) and several customers challenging recent increases in water and wastewater rates, effectively dissolving a temporary restraining order (TRO) that had blocked the Palau Public Utilities Corporation (PPUC) from disconnecting service for nonpayment of the higher rates.

In a ruling issued May 6, the Court determined that the rate increases, approved by the Palau Energy and Water Administration (PEWA), were not subject to legislative veto. The Court also found no clear evidence that PEWA violated procedures during the rate approval process. With the TRO lifted, PPUC will resume enforcement of the new rates and may disconnect customers for nonpayment beginning at noon on May 12.

Following the decision, the Senate Committee on Energy and Public Utilities urged the PPUC Board to delay implementation of the increases, citing concerns over the potential financial burden on vulnerable residents. In a formal letter sent after the Court’s ruling, the Senate emphasized that the authority to postpone the increases lies with the PPUC Board, not PEWA, and called for a pause while lawmakers work on a more equitable solution.

PPUC announced earlier this year that new rates would take effect February 1, 2025. Residential water rates will rise by 24.5% per 1,000 gallons, while commercial rates will jump 146%. Wastewater rates will increase by 81% for residential customers and 110% for commercial customers.

PPUC has reported an accumulated loss of $34.9 million in its water operations and stated that the rate hikes are necessary to recover some of the utility’s operational costs. Despite the steep increases, the agency said the new rates still fall short of fully covering service expenses.

The Senate had sought to prevent the rate hike, arguing that such sharp increases would impose undue hardship on consumers. Lawmakers instead proposed a phased approach to allow customers more time to adjust.

With the TRO lifted, the rate hikes are now in full effect.