Expert says CUC should switch fuels

If the Commonwealth Utilities Corp. switched the type of fuel it burns to power the CNMI’s power grid from diesel to heavy oil, it could save millions of dollars each year, including enough to pay for a new heavy oil-powered generator, Simon Sanchez of the Guam Consolidated Commission on Utilities said Wednesday in a speech before members of the Saipan Chamber of Commerce.

“If Saipan made a concerted effort to convert to heavy oil, the fuel savings based on last year’s fuel consumption would be 50 million dollars,” Sanchez said before a crowd at the Pacific Islands Club, noting that the savings would later add up enough to pay for the new generator.

“It would cost 80 million dollars to build a slow speed heavy oil generator and we’ve figured out that with debt service and operational costs…with the savings on fuel by going to heavy oil from diesel, you could pay for the generator and still save 30 million dollars a year on fuel, so we urge CUC to look at that conversion as fast as they can. Get out of diesel. Get into heavy oil.”

Sanchez’s analysis prompted a stir in the crowd made up of business leaders who have struggled through a recent increase in CUC’s electricity rates, due in part to skyrocketing fuel costs. One added benefit to the switch, he noted, is that the CNMI and Guam could also save money by purchasing heavy oil together.

Sanchez also had a host of key recommendations for how CUC can improve its services by mirroring Guam’s electric power system. His talk comes after CUC executive director Anthony Muña in a press conference last week said the utility service is eyeing a “Guam model” as part of its efforts to address the CNMI’s power crisis.

“You are where we were 10 years ago,” Sanchez said.

A critical aspect of Guam’s power system, he noted, is the involvement of private sector partners on everything from managing staff to fuel storage. In an ideal situation, he said, government involvement is often limited to overseeing the work of private businesses.

“It’s easier to fire a bad contractor than it is to fire a bad government,” he said. “If they aren’t producing, you know, you can go find another girlfriend that will give you what you need.”

In an interview after the speech, the CNMI’s Resident Representative, Pete A. Tenorio, said that added private sector involvement is vital to reforming CUC and that many of Sanchez’s ideas are worthy of consideration. However, the people of the CNMI must first agree to make power generation a top issue before leaders can address the problem, he added.

“The bottom line for us is to be able to agree on whether or not we think that the power generation problem is the priority,” said Tenorio. “We have not agreed to that yet. From what I gather, people have all kinds of ideas about what kind of power system we should have and I feel that once that agreement is made, then we go into the next step, which is to determine how best to address that particular problem.”

However, the private sector, he said, could play an important role.

“We need expertise to advise us, not only in terms of managing the utilities themselves but even in terms of having people from the outside do the performance management and also the operations of the power plant,” said Tenorio. “And that’s why Guam is successful, because there’s quite a bit of private sector involvement that’s out there to perform good service as well as make a profit out of the operation. I think that’s something we should look at very carefully.”