Are C.U.C.'s deposit requirements realistic and legal?

Food For Thought 3-23-07

Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It’s that time once again to take a look at the issues of the week, and to offer some Food For Thought.

Commonwealth Utilities Corporation seems to be creating quite a stir with their new deposit requirement. I have had several people contact me now about what they view as the outrageous demands placed upon customers who have been disconnected. It seems that in addition to a $75 reconnect fee, they are now also requiring a 2-month deposit, and they determine that by taking the 2 highest months billing for the previous year and coming up with an average.

Now of course there will be the occasional customer who just forgot to pay their bill on time and that’s why they got disconnected, but I’m guessing that the vast majority of disconnections are because people are having such a hard time paying the new higher electricity rates. Some people seem to think there shouldn’t be any reconnection fee charged because the utility doesn’t have to do very much to reconnect them. But you need to realize that every time there is a disconnection it starts a whole process requiring new paperwork and computer entries. That means someone is going to have to spend time working on your case instead of working on something else. And in order to be reconnected someone will have to make a trip back out to your house to reconnect your power. That means more man-hours and gas for the vehicle. Now the real question is whether $75 is a fair charge for the costs the utility is actually incurring, or are they gouging you just because they can?

Obviously the utility company would rather not have to deal with disconnections as it means more work for them, but if they don’t do something, there are those who will never pay their bills even close to on time, and will see just how much they can get away with. So a disconnection policy is needed, and some kind of charge is warranted since it makes extra work for the utility company. But is C.U.C. taking advantage of the situation and charging burdensome amounts that can’t be substantiated, that’s the real question here.

And then there is the question of why they have started requiring a 2-month security deposit? It is my understanding that they are also requiring any customer who signs up for electricity in a new location to also pay a 2-month deposit that is the average of the 2 highest months of use for the previous year by the previous tenant. So now the costs of moving have escalated as well as C.U.C. is requiring a 2 month security deposit. But I have a couple questions about this; does C.U.C. actually let you accumulate 2 months of unpaid bills before disconnecting you? Because if they disconnect you before you are 2 months delinquent, then it would seem that this new deposit is unreasonable and unjustified. If you are given a full two months before being disconnected, then it makes sense, as this way they are only covering their liabilities. But if not, then this comes across as being punitive and one has to wonder why they are charging so much for the deposit and what they are doing with the money collected.

Legally, the utility is supposed to keep all the money collected for deposits in a separate account, so they have the money on hand to immediately refund to anyone who is leaving and stopping their service. The money collected for deposits is not supposed to be used to fund general operations, or to pay for fuel or maintenance. It is supposed to be kept in reserve, because technically it doesn’t belong to C.U.C., it belongs to the customers that have paid it. C.U.C. is only holding it for the customers, and the money is only supposed to be used if and when the customer defaults on their bill, then C.U.C. is supposed to apply the deposit to the amount not paid and refund any balance to the customer. But because of the fact that C.U.C. has not been keeping the deposits in a separate account, one has to question whether the utility is using this new deposit requirement as a way to raise some fast cash? This is one area that I believe the utility could be getting themselves into some legal trouble, if they are charging more than can be substantiated for deposits and reconnection fees, and then they are not setting that money aside as they are supposed to do. And I have also been told that people have moved over a month ago, and are still waiting for the return of their deposit from C.U.C. You can’t have it both ways C.U.C., if you’re going to be putting burdensome requirements on your customers that cause hardships, then you have to be responsible enough to refund the deposits immediately and give the customers back their own money. You are taking advantage of your position as the islands only power supplier, and seem to be making your own rules as you go along. Not only are your new policies not very customer friendly, but they are extremely un-business like, and business unfriendly as well.

It is for reasons such as these that people have been saying it’s time to completely privatize everything about C.U.C. They are tired of the utility taking advantage of their position and not having any accountability. Yes, there is currently a Request For Proposal for private companies to bid on taking over the power company, but there are some serious questions as to just how legitimate the whole process is. Is it really transparent, or does it favor certain companies who have an inside track with the current administration? I have a bad feeling that at the end of this current process, we will be once again shaking our heads wondering how they managed to completely mess it up once again, in spite of the fact that they have paid hundreds of thousands of dollars in consultant’s fees.

I think it happens to be good timing that Saturday, March 24th is Covenant Day, and that Deputy Assistant Secretary of the Interior, David Cohen is on island to talk with various community groups, and to have 902 talks with our government representatives about the immigration status issue. After all, it is our Covenant with the U.S. that gave us control over our own immigration, which is now something being hotly debated both here and in the U.S. Congress and Senate. I was relieved to see that the U.S. Senate has requested the Department of the Interior to draft the legislation that will extend U.S. control over our immigration, but taking our special needs and circumstances into consideration. I believe that we are in the best possible hands if David Cohen is given the task of coming up with that legislation. He not only seems to completely understand our unique and challenging circumstances, but he seems to genuinely want what is best for the CNMI as well.

Since that seems to be the bulk of what’s on my mind today, and since this is a holiday I’m actually supposed to be getting off as well, I guess I’ll wrap things up and go for a dive to celebrate Covenant Day! Happy Covenant Day everybody!

I’m Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.