Independent entities of the national government are losing their independence as control and interference over their boards’ operations and authorities compromise their ability to fulfill their mandates.

House bill 11-50-5S, HD1 proposes to move the rate-setting authority of Palau Public Utilities Corporation to Palau Energy Authority, changing it from PEA to PEWA (Palau Energy and Water Administration).  PEWA will set rates for water and wastewater and PPUC will only implement them.

PPUC Board will be required to obtain approval of PEWA for any water or wastewater rates adjustments.

“The Palau Energy and Water Administration shall have the sole regulatory authority in the areas of energy production, water, and wastewater production, purchase, sale, as further established in Chapters 6 and 7 of this Act.  The PPUC shall have NO authority to issue regulations governing energy production, water, and wastewater production and any existing regulations governing energy production, and water and wastewater production and shall be rendered void upon the promulgation of regulations by PEWA.”

Although the bill states that PPUC will set rates, tariffs for power, water, and wastewater, it does so only with the approval of PEWA.

Any contracts PPUC enters into requires prior approval of PEWA.

PEWA  is then placed as an office within the Ministry of Finance according to the bill which says it “shall be a separate entity within the Ministry of Finance”, a function under the Executive Branch.

In addition, Executive Order 373, places the Minister of Finance as the “Responsible Minister with financial and operational oversight over all State-owned enterprises.”

Palau Public Utilities Corporation, according to this bill and in conjunction with EO 373, becomes an entity under the Executive Branch and will not be an independent state-owned enterprise with a Board that is fully accountable to both the President and the OEK.

Other SOEs such as PNCC and PPUC’s are designed to be independent where the boards have management and control of the corporations.  Members are appointed by the President and approved by the Senate.  President can remove members for cause, enabling the independent nature of the entities. 

Removing control and key management functions from boards of SOEs is defeats the purpose of independent government agencies.

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