House members call on ASPA to refrain from rate hikes
All 21 members of the House signed a resolution, approved Monday, calling on the American Samoa Power Authority to re-evaluate its existing rate structure, refrain from scheduled rate hikes and pass achieved cost savings on to customers.
The resolution accuses ASPA of making empty promises of passing on savings to customers while presenting a budget hike in the millions of dollars.
The resolution comes two weeks after ASPA chief executive officer Andra Samoa told the Fono joint budget committee that the authority is moving ahead with the next rate hike set for Oct. 1 this year. The increases affect monthly customer service charges, base water rate, ground water contamination abatement charges, plus solid waste collection fees.
According to the House resolution, the new rate hike will impose additional financial burdens on both residential and commerce ASPA customers. It also states that ASPA’s 2009 rate plan, with its automatic increases, does not consider or provide for effects of potential economic events.
Specifically, said the resolution, the plan:
• did not anticipate the impact on American Samoa of the 2008 global economic collapse;
• did not factor in the ripple effect of the loss of the territory’s second largest private employer (referring to COS Samoa Packing, who closed production in 2009);
• does not consider the expiration of several major federal financial programs which provided temporary relief; and
• does not factor in the reality of increases in basically all categories of the cost of living, while employee’s wages remain generally static.
The House claims that the existing rate plan is singularly designed to increase revenues, or profit, for ASPA operational expenses, without consideration of the hardship placed on residential and commercial customers who ASPA is supposed to be serving.
“...the result of such a plan is that customers must bear the burden of a utility bill which is disproportionate to their incomes and makes it extremely difficult, and, in many cases, impossible to meet other basic obligations of providing for their families, meeting cultural obligations, and continuing their business enterprises,” the resolution pointed out.
It also states that ASPA continues to justify increases by stating to the public that its business plan and alternative energy programs will result in savings, which will be passed on to its customers but “ASPA has failed to deliver on these promises.”
For example in 2009, ASPA “guaranteed” that its move to become a fuel supplier would result in savings which will benefit its customers — but to date, “the only result seen is a $30 million increase in ASPA’s budget, with zero benefit for customers.”
Additionally, ASPA recently brought on-line its federally funded photo-voltaic project, providing solar generated energy to the electric grid, which is estimated to reduce ASPA’s diesel fuel consumption by 197,391 gallons and achieve an annual cost savings of about $790,000.
As a not-for-profit government entity, the resolution says ASPA has a duty to review and reevaluate its existing rate plan in light of current economic conditions and realities, and additionally, to pass any cost savings on to its customers by suspending implementation of the new rate hikes and actually reducing its electric rates.
During ASPA’s budget hearing two weeks ago, Samoa eminded lawmakers that the authority in 2010 granted the first delay following a request from the Fono.
However, due to financial obligations by ASPA, the authority is unable at this time to “hold” the next rate hike, which is implemented in phases, not all at one time, in order to lessen the burden on customers, she said, adding that there are also accounts receivable that ASPA has to deal with, such as ASG’s outstanding utility bill which is edging towards $11 million.
ASPA chief financial officer Susana Fai’ivae said the authority estimates to collect about $440,000 under the new fee hike with trash collection the highest rate hike at about $1.44. Fai'ivae points out that $440,000 is a small amount to be collected compared to the many financial needs of ASPA as well as the many projects it needs to carry out to further improve utility service.