CUC board doesn’t want receivership

U.S. District Court for the NMI designated judge David O. Carter looks at a portion of the new oil pipeline that connects the Mobil Oil plant to the Commonwealth Utilities Corp.’s power plants in Lower Base. Joining Carter’s on-site inspection on Saturday were CUC U.S. Environmental Protection Agency lawyers and officials, and local officials. (Ferdie de la Torre)

Commonwealth Utilities Corp. board chair David Sablan Jr. said the utilities agency is not amenable to being placed under receivership and that it can address stipulated orders with the cooperation of the government and community.

“CUC can do what needs to be done if we can have the community and the government agencies’ help by paying CUC,” Sablan told reporters yesterday.

The U.S. Environmental Protection Agency has requested the U.S. District Court to appoint a receiver for some court-mandated projects of the embattled utilities company.

Sablan said that everything happening now with CUC is similar to a domino effect.

“The government pays, CUC collects, stipulated projects are funded for, EPA approves the projects, and problems with CUC are addressed and the end result, the community has a better service from the public utilities. We just don’t want to go down that road in having a receiver and you don’t want it as well,” Sablan said.

He said the CUC board can make handle any decisions that a receiver would do with CUC projects

“We don’t agree with a receiver because we know what to do. We don’t need someone from outside advising us on what to do,” he said.

He pointed out that if a receiver does come in, everything will be done under the order of the court.

“If the receiver wants this rate, the [Commonwealth Public Utilities Commission] doesn’t have to approve it. …The receiver doesn’t need approval, he can just tell them to do this, as if [the order] comes from the court,” Sablan said.

“The rates may even be higher than it is now. The main focus is the receiver only wants to complete the projects and they know that the government has the money and if he needs it he will get it from them. You don’t need anyone telling you what to do when you know you can do it,” he added.

The stipulated orders that need to be addressed represent the agreement between the CNMI and EPA on how CUC will come into compliance with the requirements of the Clean Air Act and the Safe Drinking Water Act.

U.S. District Court for the NMI designated judge David O. Carter recently inspected all CUC projects related to the stipulated projects and has ordered CUC, EPA, and the CNMI government to come up with a proposed settlement agreement by Thursday.

Collection of past arrears

According to Sablan, the frustration on Carter’s part is that some of the other stipulated order projects have not been funded or have not even began construction yet, and there is no resolution yet on when they will be done.

Sablan said that there are 14 other projects under the stipulated orders.

“The bottom line is that there is no funding for the projects. Those are what we term as ‘rate-based projects.’ The rates on the bills sent out and cash collected is what will fund these projects and we haven’t addressed the problem because a big chunk of the cash flow is supposed to come from the government,” Sablan said.

He said that addressing the past arrears of local government agencies and past dues from delinquent accounts and aged accounts could help the completion of the stipulated order projects.

Over $23 million is still uncollected from the central government, the Public School System, and the Commonwealth Healthcare Corp.; about $5 million is owed by residential customers.

Sablan concedes that EPA funds both of the big stipulated projects: the oil pipeline and tank projects.

“Things have changed and what needed to be addressed, but a good portion of the stipulated projects have not been addressed yet because the money has not been flowing,” he said.

On the Tank 101 and Tank 102 projects, which are two large aboveground storage tanks for oil, the problem with both of the tanks are corrosion and roof damage. These two are now offline, leaving only Tank 103 as the main source of storage for oil at Power Plants 1 and 2.

According to Sablan, Tank 102 was put on hold because of additional funding requested by the past contractor, GPPC, and it had used up all the funds to do the project but had done a bad job. Tano Group Inc. is now the contractor. It signed up to do the project a few weeks ago to finish the project.

Sablan said the only issue now is the oil pipeline, an 8-inch aboveground receiving pipeline.

The other stipulated order No. 2 projects—14 unfunded projects—will cost $20 million. CUC was given the order in 2011 to finish all projects but Sablan said that none has been done so far.

Direction

Sablan told Saipan Tribune they will present their position on the matter to the court, but he declined to disclose how they will approach the matter until the scheduled court hearing on Thursday.

“We’ve directed our legal counsel on our options. The two directions that we have provided our legal counsel is the best we can do for now until the decision is made,” Sablan said.