Fitial accepts CUC chief’s resignation

Gov. Benigno R. Fitial accepted yesterday morning Commonwealth Utilities Corp. executive director Abe Malae’s resignation, saying a leadership change at CUC is “necessary.” Renewable energy contracts are expected to be awarded faster coupled with the push to privatize more of CUC operations-as has been the Fitial administration’s plan since taking office.

Some lawmakers, meanwhile, reiterated that Fitial’s emergency declaration for CUC is unwarranted and suggested it be either rescinded or amended.

One of the major reasons the governor cited in his emergency declaration-the absence of a functional Public Utilities Commission-has been addressed and would help move renewable energy contracts, some lawmakers said.

The Senate confirmed during an emergency session at 3pm yesterday three of Fitial’s nominees to PUC, which now has a quorum and can review alternative energy procurement contracts once a request for proposal is complete.

Press secretary Angel Demapan said yesterday there’s no rescission or amendment of the executive order at this time, adding that “there still exist the other findings.”

Senate President Paul Manglona (Ind-Rota) said the Senate questions the emergency declaration for CUC but understands the need to have a functional PUC to review CUC matters, including contract awards so they confirmed three of Fitial’s nominees.

There has never been a full PUC board since its inception. The governor nominated three to PUC only after the term of the last remaining commissioner expired.

Manglona also said the Commonwealth Healthcare Corp. would have been able to pay CUC for past due utility bills had the governor signed a bill authorizing the Marianas Public Land Trust to provide an additional $7 million revolving line of credit for CHC.

Fitial said that CUC is owed over $8 million by the cash-strapped central government, the Public School System and CHC.

Malae resigns

Malae submitted his resignation letter to the governor’s office late Wednesday afternoon, but the governor didn’t see the letter until Thursday morning, the administration said.

Fitial, in a chance interview with reporters early afternoon yesterday, said he accepted Malae’s resignation but declined to comment further, saying a written statement will be forthcoming.

In a statement about an hour later, Fitial cited four reasons for believing that “a change in leadership is necessary,” including not seeing “evidence of aggressive action to seek out viable alternative energy sources [that] would provide cheap power.”

“We need to bring reliable, environmentally sensitive, and affordable utilities to the people of the Northern Mariana Islands; and I am tired of waiting for this to happen. I want a plan that provides for quick accomplishment of these objectives; not the ‘four or five years from now’ which has been cited by CUC,” Fitial said.

Malae, in response to Saipan Tribune questions, said the governor is correct about the slowness of the renewable energy development “and I am frustrated too with the to-ing and fro-ing between legal counsels-but they are only trying to protect the interest of the CNMI.”

“You don’t want the residents 10 years from now complaining about the foolhardiness of a 20-year supply contract. The EO is an excellent tool to get things done; of course in the wrong hands it can do much damage,” Malae said.

Malae, a former senator in American Samoa, said the 40 percent renewable energy penetration mandated by law for completion this year is “unrealistic.”

“And even if it were online, it would destabilize the grid. But we have to work with that because that it what the politicians passed,” he added.

Malae also said the governor may have signed the executive order placing CUC under a state of emergency last week “but he did not issue it until [Wednesday].”

“He had the courtesy to call me in on Tuesday to explain what he was going to do. I respect him for being a gentleman,” Malae said.

Fitial’s executive order is dated May 18. The Legislature received copies of the EO on Monday, but most lawmakers saw their copies only on Wednesday.

The emergency declaration effectively suspends regulations and allows the reprogramming of funds to address cash, procurement and hiring crises at CUC, barely 14 months after the governor lifted CUC’s prolonged emergency status.

In August last year, Malae told the Fitial administration he’d leave CUC by end of Mach 2012 because he’s running for governor of American Samoa in the November 2012 elections. Two months later, Malae said he’s no longer running for the post and will be staying with CUC.

Malae ran for governor of American Samoa in November 2008 and finished second. He left his American Samoa Senate seat in Sa’ole county in 2009 to accept the CUC position after the CNMI government asked for his help to turn around the then-troubled utilities corporation.

Contract awards

The Fitial administration has long wanted the privatization of CUC. This was reiterated yesterday by the administration.

Sources privy to CUC matters said the emergency declaration for CUC is a move towards privatization of the utilities agency, more than the awards of alternative energy contracts to foreign businesses that have been visiting the CNMI for months and years now.

Herman Sablan, a businessman and local representative of American Capital Energy Co., one of the foreign businesses that submitted a proposal to CUC for solar power generation, said in a separate phone interview yesterday that American Capital has long been waiting for the actual contract award.

American Capital responded to an RFP for phase 1 of the solar project involving 10 megawatts of renewable energy, he said. Phase 2 has other sets of bidders.

“I am very disappointed [with] Abe Malae for not executing a contract for several months now. Our company received a draft contract months ago but until now, there’s no actual contract award. Besides, the two companies that protested voluntarily withdrew their protests. Our company went through a bidding process. Our people are already suffering because of high power rates but CUC is not moving forward with contract awards that went through bidding process,” Sablan said.

He also said American Capital is offering “below” 20 cents per kilowatt power compared to CUC’s current rate of over 30 cents per kW for residential customers.

Leadership change

In a separate memo issued yesterday afternoon, Fitial named CUC deputy executive director Alan W. Fletcher as acting CUC executive director effective immediately.

Fitial said he accepted Malae’s resignation “because I believe a change in leadership is necessary for four reasons.”

“First our utility rates are among the highest in the United States, and this high rate is having a direct impact upon every household in the community,” he said.

Second, the high utility costs are crippling the economy, the governor said.

“Third, I do not see evidence of aggressive action to seek out viable alternative energy sources, which would provide cheaper power. Areas such as solar, geothermal, waste-to-energy, wind, and wave are all sources of power here, yet we have a feeble half-hearted approach to the examination of these alternatives. Finally, I do not see any prospect for change in the approach to these issues, and thus it is time to bring in new leadership,” Fitial said.

Action plans

The governor also said he will ensure that “a comprehensive review of CUC is conducted and recommendations and action plans are formulated at the soonest possible time.”

The press secretary said the specifics of the governor’s administrative actions include the following findings:

– CUC cash flow to be addressed through increased reprogramming authority now available to the governor.

– Suspension of provisions that limit CUC authority to select less expensive vendors because the Board of Professional Licensing lacks a quorum to issue required licenses and certificates.

– CUC needs to be able to hire non-U.S. technical workers or its systems will fail.

– CUC must contribute to renewable energy efforts so more power is available and at lower costs-not five years from now, but soon.
Fitial said the Legislature, through Public Law 17-1, has limited CUC’s ability to hire technical staff that are non-U.S. citizens but are experts in the fields required by CUC. It was Fitial who signed that bill into law.