CUC OKs putting up funds for operations, maintenance

The Commonwealth Utilities Corp. has agreed with the U.S. government’s recommendation for CUC to set up operations and maintenance programs, or O&M, to better ensure that the millions of funds CUC receives from the federal and CNMI governments for projects are spent properly in the future.

The U.S. government, on behalf of the U.S. Environmental Protection Agency, and CUC have agreed that CUC shall implement O&M activities according to industry standards.

That means CUC shall create, fund, and maintain a separate account to ensure the long-term operation and maintenance of new and existing oil infrastructure.

This will hopefully ensure that infrastructure outlined in court-ordered projects—Stipulated Order No. 2 and the Environmental and the Engineering Management Company order—would continue to operate safely and effectively.

SO2 refers to court-mandated projects that focus on oil issues and apply to oil spills and the remediation of the contaminated power plants.

Under the agreement, beginning on July 31, 2019, and every year after that, CUC shall infuse $475,000 per year to the O&M account for 10 years.

Bradley R. O’Brien, senior lawyer of the U.S. Department of Justice Environmental Protection Section, and deputy attorney general Lillian Ada Tenorio submitted the agreement before the U.S. District Court for the NMI last weekend on behalf of EPA and CUC.

O’Brien and Tenorio said that, at a minimum, the funding must be reserved to address large-scale O&M activities that occur on five-year or 10-year cycles, such as smart pigging and tank inspections.

O’Brien and Tenorio said CUC may augment the O&M account for additional activities but shall maintain the minimum funding level of $475,000 per year.

Under the agreement, CUC shall report O&M account funding, activities, and expenditures to EPA every year.

EPA need not approve O&M account activities but the agency maintains the right to object to any O&M activity.

The parties agreed that EPA and CUC shall evaluate the annual O&M account funding level and budget at least every year to look into any potential need for adjustments to address price increases or additional O&M activities and costs.

The O&M account is a discrete account and shall remain separate from all other accounts and budgets, such as the power generation and distribution budgets.

Earlier, O’Brien told the court that a judicially enforceable mandate should be established requiring CUC to fund, schedule, and implement effective O&M programs for the federal court’s two stipulated orders-funded projects.