Watson: CUC’s $15.7M debt to DPW could hit ratepayers

12/02/2025 - Department of Public Works Secretary Ray Yumul said the Commonwealth Utilities Corp. owes DPW $15.7 million in road-cutting violations, penalties, and daily fines—an amount that CUC executive director Kevin Watson said would ultimately land on the backs of Saipan, Tinian, and Rota ratepayers if collected in full.

The multimillion-dollar tally covers years of emergency water and wastewater trenching that either proceeded without DPW permits or did not meet the department’s restoration deadlines. DPW began formally invoicing CUC after completing administrative hearings confirming the violations.

But Watson said enforcing the fines as written would punish residents for work CUC was legally and operationally compelled to do.

“If we even had the funds to pay it, it would have to be recovered through a rate increase to our customers of the CNMI of Saipan, Tinian, and Rota. And it’s unfair just to be able to line the pockets of DPW because that's basically what those permitting fees are.”

He added that CUC does not control when pipes fail and often responds to emergencies during weekends or holidays when DPW’s permit office is closed.

“We don't wait until Monday to call them up or go to their office to get a permit. We do the work immediately. One, to conserve water. We have a very limited water supply here in the CNMI. We have to conserve every gallon we can to keep the aquifer from depleting itself and the saltwater intrusion from coming in, which would also ruin all the crops for the farmers. So, you know, does DPW want us to wait? Or would they, like most customers here, want us to go ahead and take care of the problem, fix it, and go on about our lives? So it's not just about the repair.”

Watson said CUC and DPW have already been working hand-in-hand for nearly two years to clear the backlog of road restorations. But the fines—assessed at $500 to $1,000 per day on certain cases—continued to accumulate because the law does not distinguish between emergency trenching and routine road cuts.

He also said the Legislature has already set a precedent in forgiving major interagency debts, namely the Commonwealth Healthcare Corp.’s fines and penalties to, ironically, CUC.

“Yes, there is a precedent already passed by the Legislature and signed into law by the governor. Over $38 million was forgiven,” said Watson.

Meanwhile, Yumul pushed back on CUC’s request for blanket forgiveness, saying the administrative hearings were conducted properly and that DPW has simply enforced the statute as written.

“I am aware that CUC has written a letter to the respective houses of the Legislature asking for a relief bill to allow basically CUC forgiveness. Unfortunately, the road, the cuttings are still for some, a lot of them are not completed yet. And I've lobbied against that, saying that, you know, that's not fair because even for us as rate payers, if we get fined by CUC for penalties, right, they threaten to cut us,” he said.

But Yumul clarified that DPW is not demanding CUC cut a check for $15.7 million. Instead, he is urging senators and representatives to authorize a multi-year offset system under which DPW’s monthly CUC bills—driven largely by streetlighting usage—would be applied against CUC’s outstanding balance.

DPW pays nearly $1.3 million annually in streetlight power alone. Yumul estimates that an offset approach could restore at least $8 million to his operations over the next five to eight years.

“I'm not asking them to pay us, you know, I'm saying work with us and offset. You know, it's for the benefit of the community. It's a public benefit.”

Yumul said a stable and unrestricted road-maintenance fund would allow DPW to expand solar streetlighting on village routes, replace missing reflectors along accident-prone corridors, and invest in longer-lasting pavement patches for both primary and secondary roads.

He said members of both chambers of the Legislature were “sympathetic” to DPW’s approach after private briefings.

Report by Mark Rabago