BY: Eustoria Marie Borja
SAIPAN—Two critical letters from community organizations have called for immediate action from Governor Arnold I. Palacios, highlighting urgent issues related to utility rates and healthcare financing in the Commonwealth of the Northern Mariana Islands (CNMI).
Health System in Crisis
In a letter dated November 7, 2024, Kånnai Komunidat – Payúúr Toulap, a local advocacy group, outlined the severe financial challenges facing the Commonwealth Health Care Corporation (CHCC). The organization, led by Secretary Alexandra C. Villagomez, Chair Candice Muña, and Member Analee C. Villagomez, urged the Governor to sign Senate Bill 23-37, which was introduced by Senator Jude U. Hofschneider on April 19, 2023. The bill, titled “An Act to Mandate the Commonwealth Utilities Corporation to Change the Power, Water, and Wastewater Rate for the Commonwealth Healthcare Corporation to Commercial Rate; and for Other Purposes,” proposes transitioning CHCC from a government-rate utility structure to a more manageable commercial rate. This move is seen as essential to addressing CHCC’s overwhelming $67.1 million utility debt to the Commonwealth Utilities Corporation (CUC), a burden that has drained the hospital’s resources and hampered its ability to deliver essential healthcare services.
On November 18, 2024, Governor Arnold I. Palacios signed into law House Bill No. 23-37, SD1 HD1, entitled “To mandate the Commonwealth Utilities Corporation to change the power, water, and wastewater rate for the Commonwealth Healthcare Corporation to commercial rate; and for other purposes,” which was passed by the Senate and the House of Representatives of the Twenty-Third Northern Marianas Commonwealth Legislature. This bill now becomes Law No. 23-90.
Impact on Healthcare Services
Senate Bill 23-37 addresses CHCC’s financial challenges by mandating that CUC charge the hospital a commercial rate instead of the higher government rate. Currently, CHCC pays a base rate of $0.1240 per kWh under the government rate, which is significantly higher than the $0.1130 per kWh commercial rate. Since CHCC is a large-scale facility with 24/7 utility demands, the existing rate structure has made it financially unsustainable. The new law also waives all late fees and penalties that have accumulated from fiscal year 2011 to the present, potentially relieving CHCC of nearly half its utility debt, which consists of $35.2 million in arrears and $31.9 million in penalties.
According to the letter from Kånnai Komunidat – Payúúr Toulap, CHCC’s financial struggles have translated into diminished healthcare quality. The hospital has been forced to divert funds away from critical medical supplies, advanced diagnostic equipment, and adequate staffing, resulting in delays and shortages that directly impact patient care. Advocates believe that by adopting a commercial rate and reducing debt, CHCC will be able to invest in essential upgrades and specialized medical staff, significantly improving healthcare outcomes for the CNMI community. Furthermore, reducing the financial burden could lessen the need for off-island medical referrals, which impose additional costs and logistical difficulties on patients.
Petition for Fair Utility Rates
In tandem with the call for Senate Bill 23-37, Kånnai Komunidat – Payúúr Toulap launched a petition, signed by over 2,347 residents as of October 18, 2024, demanding immediate action to lower the high cost of utilities. The petition underscores the financial strain caused by exorbitant utility charges, which are among the highest in the United States and its territories. Residents highlighted issues like the Fuel Adjustment Charge (FAC), which often doubles monthly electricity costs, pushing bills to unaffordable levels for many households. They also pointed out CUC’s monopoly on utility services, lack of oversight, and inefficient spending, which are seen as key contributors to inflated rates.
Signatories expressed frustration over CUC’s practices, noting the lack of public input in rate-setting hearings and the government’s indirect control over utility operations. The petition calls for an end to these practices, emphasizing that the financial burden of unpaid government utility debts should not fall on already struggling consumers. It also demands accountability and the elimination of excessive charges to relieve the economic pressure on residents.
Utility Rate Transparency Under Fire
The second letter, dated November 6, 2024, called on Governor Palacios to mandate that CUC work with the National Renewable Energy Laboratory (NREL) to conduct a comprehensive Cost of Service Study. This study would aim to bring clarity and transparency to CUC’s rate-setting practices. Despite NREL’s offers to assist since 2015, CUC has chosen to work with private firms, such as Economists.com LLC, whose findings and methodologies have raised concerns about accountability and fairness. The letter emphasized that NREL, a respected federal entity, would provide an unbiased analysis, ensuring that utility rates accurately reflect the cost of service rather than unnecessary expenditures.
Moreover, CUC’s reluctance to engage with NREL has fueled public distrust, as residents believe the utility corporation’s rate-setting process lacks oversight and transparency. The advocacy group also cited documented instances of CUC management disregarding offers from NREL and highlighted the inefficiency of relying on private consultants funded by ratepayer money. They argue that a federally-backed study would instill public confidence and potentially lower utility rates for CNMI residents.
Call for Leadership
Both letters make a strong appeal for Governor Palacios to continue taking decisive action to address these intertwined crises. By signing Senate Bill 23-37 into law, advocates believe the Governor has made a crucial step toward alleviating the financial strain on CHCC and CNMI residents. They also look forward to ongoing efforts to ensure utility rate transparency and fairness through further studies and oversight.
With utility rates and healthcare funding reaching critical points, the community’s call for continued reform reflects a broader demand for fair governance and accountability. The new law marks progress, but the mounting pressure underscores the importance of sustained action and collaboration in Saipan.