By: L.N. Reklai

September 14, 2017 (Koror, Palau) Palau Public Utilities Corporation (PPUC) denies that it charged customers for fuel cost excessively by not adjusting the AFPAC fuel tariff in response to a letter from some Senators questioning PPUC’s fuel cost charges.

“No, we believe that there was no over-recovery of fuel cost in the last four years.” Furthermore, PPUC states that there was no “excessive cash from fuel revenue”.  The fuel cost represented 55%  of operating expense and  fuel revenue represented 55% of operating revenue.

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PPUC assures the Senate that it did not overcharge its 7,000 customers in their power billing computation.

In addition, PPUC states that its cash balance did not increase from $8 million to $15 million due to over recovery of fuel cost in 2016.  “There is a difference between revenue and cash.  Revenue is the money that PPUC takes in from providing services to customers, whereas Cash flow refers to available cash on hand which include all other sources of cash (subsidies, grants, interest income and sales of assets).

PPUC asserts that the $15 million cash reported in 2016 include all cash such as the $3 million minimum requirement in Capital Maintenance Account, Accounts Payable to suppliers, vendors, etc, loan balances for both power and water as well as subsidies earmarked for specific programs.

The letter states, “PPUC continues its efforts to manage its cash efficiently and to ensure obligations to vendors, contractors, and suppliers payment schedules are maintained for the benefit of PPUC such that cash reserves are always maintained to cover any unplanned emergencies.”

In response to question why AFPAC (fuel charge) isn’t at its lowest in 10 years since PPUC’s fuel cost is at its lowest in 10 years, PPUC replied, “It is the lowest.”

According to PPUC, AFPC fuel rate has been dropping for the last four years.  In 2014 it was at 0.287  and in 2015 it dropped to .0199 and in 2016 it dropped further to 0.181 and now 2017 the average rate is 0.152.

Average rate per kilowatt paid for by customers also follow the same declining trend. In 2014, per KWH was at 0.396, in 2015 it was at 0.308, in 2016 it was at 0.290 and in 2017 it’s at 0.261 per KWH.

PPUC expressed its appreciation for the compliment made by the Senators’ letter which recognized that PPUC’s “fuel consumption is lower as compared to prior years, which never happened in the history of PPUC”.

PPUC added that with energy loss reduced to 15% , it has been able to sell more power to customers, showing sharp increase in sales growth in 2015.

Regarding the impact of unadjusted AFPAC rate on Waste Water Operations tariff, PPUC claimed AFPAC was never considered when WWO tariff schedule was established in 2010.

Furthermore, it states that electric charges to Waste Water Operations have been reduced by 35% due to major capital improvement projects that have been implemented. The electric charge for Waste Water Operations is at its lowest ever, according to PPUC.

On the issue of transparency, PPUC asserts that it has put efforts to be as transparent as possible and that it is the only agency of the government that has attended oversight hearings three weeks in a row this year alone to address these same issues. In addition, it had provided the same information 3 to 4 times to Senate leadership this year.

“PPUC agrees that low utility rates are needed for low income people of Palau. Equally important is the sustainability of the public corporation designed to provide the essential service to the Republic of Palau. For these reasons, the National Government …provided funding for a low-income subsidy program for electric and water rates back in 2016. So far, over $200,000 is left from this subsidy with only 50 applicants,” stated PPUC in its letter to Senate. [/restrict]