Senate overrides governor’s veto on CUC’s privatization

The Senate has voted to override the governor’s veto of a bill requiring the Commonwealth Utilities Corp. to sell its power system to the highest bidder.

Eight of the nine members supported the override, easily meeting the two-thirds threshold needed to pass the measure over the governor’s objections. Sen. Luis Crisostimo abstained.

Senate President Pete P. Reyes said the override, which took place during a session on Rota last week, was “one of the least debated actions taken by the Senate.” He said the Senate members agreed the privatization of the power system should be done through a bid process.

“The members are very concerned that the privatization contract might be sole-sourced. We want to prevent this from happening especially because a contract like that has many long-term ramifications,” Reyes said.

The House of Representatives is expected to consider the veto on Thursday, Sept. 25, 2008. If the House votes to override, the bill will become law.

Press secretary Charles P. Reyes Jr. reiterated the administration’s opposition to the bill. “If passed into law, this bill would be very damaging to CUC. It would undermine any privatization efforts,” he said.

Reyes pointed to the $250-million price tag proposed for the power system, saying it was excessive and could discourage potential bidders.

The bill would mandate CUC to sell its power system for at least $250 million through a bid process. It also proposes to restore the CUC board of directors, which Gov. Benigno R. Fitial abolished in 2006.

In his veto message to the Legislature, Fitial listed deficiencies in the bill that he said would increase CUC’s costs or would push the rates further up.

Factoring in the $250-million price tag for the power system and CUC’s current monthly sales of 20 million kWh, and assuming a 10 percent return on investment and recovery of principal over a period of 40 years, the power rate could increase by 10 cents per kWh, Fitial said.

Among the other issues Fitial raised is the requirement for any contractor operating the plant to have five years experience in compliance with emission standards set by the U.S. Environmental Protection Agency. He said this may preclude international companies who have experience with power plant operations and capable of compliance, but not having five years experience, from bidding.

“While I commend the Legislature for its continued efforts to resolve the power crisis of the Commonwealth, the legislation as passed presents many deficiencies,” Fitial said. “I encourage the Legislature to work with CUC to develop this measure further to achieve successfully its intended purpose.”