AR collection challenges delayed ASPA rate reduction
The initial phase of reducing ASPA rates and fees “highlighted concerns raised by the community — and mandates by the current administration — that ASPA felt it was important to provide immediate relief.”
This is according to an email from the Executive Director of the American Samoa Power Authority Utu Abe Malae who was responding to Samoa News inquiries about the financial effects the recent reduction in ASPA fees and rates would have on the semi-autonomous agency.
Last month, ASPA finally made good on its promise from previous years that becoming a fuel supplier in 2008 would result in savings of eight cents per gallon in fuel costs — savings that would be passed on to local customers. During last year’s budget hearings, lawmakers raised the issue with then ASPA officials, and requested that ASPA pass on the savings to customers, as promised from the beginning.
At the time, instead of lower utility bills, ASPA used the savings, which amounted to more than $1.5 million annually, to pay off old debts and a $2.8 million loan relating to its fuel supply operations.
But there has been a sigh of relief since an ASPA public notice printed last month announced that the utility provider would pass on the 8-cent per gallon savings to customers. The savings were evident when the Feb. 21 utility bill was released and the savings showed up as a deduction from the monthly fuel surcharge for each customer.
The ASPA management team says “customers deserve some relief in the cost of utilities, albeit a small discount, but long overdue.”
Utu explained this past weekend that the most significant rate reduction is a direct result of ASPA serving as its own fuel supplier. He said that in 2008, when ASPA ventured into the fuel business, local consumers were promised a savings of $0.08 off the Maximum Allowable Price, or MAP, which is the discount ASPA is receiving from Exxon Mobile for supplying ASPA’s fuel.
“It is important to understand, that this is just for the fuel ASPA uses for the generators and does not include the fuel we sell for the commercial market,” Utu clarified.
He said ASPA calculated $60,000 in savings a month for all electric customers, which went into effect last month. “It will be less revenue for ASPA, but it is a savings passed on to our customers,” Utu said.
However, he added, “It must be made known that there were challenges with collecting from the government and other accounts receivable in the past, and this has adversely affected our cash flow" and "is one of the many reasons why these savings were not passed on” initially.
Utu said that at present, ASPA is working with the ASG Treasury Department on a Memorandum of Agreement that will enable ASPA to receive consistent payments for the past due government utility bills, and secure payments for all future utility bills.
In addition, “ASPA is working on improving internal operations, cash collections, and considering encompassing more ways to pass on any other savings gained as ASPA becomes more efficient.”
The ASPA CEO said “the fees that were reduced are for specific services or installations that will help encourage people to use the ASPA water system, plus remove restrictions that hindered our ability to help customers reconnect their services upon returning home from being off-island for a while.”
On a case by case basis, he added, “the reductions will have a small effect on our revenue, but it will enable us to provide better service to our customers, given that some of these fees were high and discouraging people from using these services.”
ASPA has reduced the installation fee for a water meter from $300 to $150. Utu said the intent is to encourage customers to get hooked up to the ASPA water system, which will benefit the utility in the long run.
Furthermore, the new “Pause Fee” was implemented as a result of complaints from customer that would leave the island for a couple of months and return home to find their services disconnected and service charges still accumulating.
“Utility customers must understand that as long as the meters are active in the field, the service charges are assessed,” Utu explained. The “Pause Fee” now allows customers to request a temporary hold on their utility account, and it will be much more affordable to reinstall their services when they return. Basically, this means that instead of paying new installation fees to restore service, ($150 for electric and the prior fee of $300 for water) the “Pause Fee” will be $50 for electric and $50 for water.
ASPA has also reduced the after-hour vending fee from $5 to $2. “This has been a popular and welcomed change, resulting in an increase of after-hour vending traffic by our debit meter customers,” Utu said. “The impacts of this change are minimal since the increase in volume of customers using this service is making up for the difference.”
According to the official American Samoa Government website, the ASPA Board of Directors sent a letter to Gov. Lolo M. Moliga, dated Feb. 13, 2013, informing the governor of newly approved actions and developments that would benefit their customers, one of them being the reduced rates of utility bills.
“Other actions ASPA mentioned in the letter, was a proposal to help reduce ASG’s debt to ASPA. According to the letter, if this debt is paid off over a reasonable amount of time, customers of American Samoa will benefit,” however, “without sufficient cash, ASPA cannot sustain the rate and fee reductions already approved by the Board.”