By: L.N. Reklai
September 25, 2017 (Koror, Palau) Senators Rukebai, Chin, Akitaya, Senior and Whipps, continue to question Palau Public Utilities Corporation explanation of its fuel cost recovery stating that potential excessive over-recovery of fuel cost cannot be dismissed because the submitted documents do not have supporting documents to show that customers have not been over charged for fuel recovery cost. [restrict]
In the 6 page letter, Senators note that comparison of yearly data from 2013 to 2016 show trend for declining fuel cost. In 2016 it showed that fuel cost dropped by 30% but Power revenue only dropped by 6%.
“This discrepancy is too large and unjustified” said the Senators.
Based on the information provided, in 2016, PPUC made $12.5 million from power revenue and cost of fuel was $10.1 million. This implies that PPUC made $2.3 million excess revenue from excessive fuel charges.
Furthermore, Senators raise an issue with report that $9.4 million was being held in reserve for NDBP and Mega Bank loans. Financial audit of PPUC shows that it owed $4.2 million to Mega Bank and $2.2 Million to NDBP.
“If a reserve fund is a condition for the these loans, it should be less than the loan outstanding balance. With so much money, PPUC must seriously consider paying off most of the balance of these debts to reduce interest expense and relieve pressure to hard cash in its reserve bank account,” stated the Senators.
Furthermore, Senators assert that the depreciation expense, a non-cash expense of $2.7 million, should enable PPUC to maintain some of its major capital improvements as well as use it to pay off its loans.
The five senators issued request for more information from PPUC in order to clarify the question of potential overcharge of fuel cost to customers. [/restrict]