CUC complies with court orders to reserve $750K in separate accounts for 2 projects

Pursuant to court orders the Commonwealth Utilities Corp. was able to deposit $750,000 into separate accounts for two projects—oil infrastructure operations and maintenance and the pipeline project.

CUC counsel deputy attorney general Lillian Ada Tenorio disclosed that CUC has established an operations and maintenance fund account separate and apart from other CUC accounts, in accordance with the joint stipulation and court order.

Tenorio

In CUC’s status report filed before the federal court, Tenorio said an initial deposit of $475,000 was made in the restricted account on Aug. 6, 2019, that is reserved for oil infrastructure operations and maintenance.

CUC has also established on a separate account for a future pipeline “smart pig” inspection by a third-party analysis in the amount of $275,000 withdrawn from the Technical Manager for Oil fund on Aug. 6, 2019, she said.

Tenorio said expenditure of the fund requires the prior approval of the U.S. Environmental Protection Agency.

The report was in response to U.S. District Court for the NMI designated judge David O. Carter’s order directing CUC and the CNMI government to provide a status update on the two projects.

Carter

In his declaration, CUC chief financial officer Greg Cruz said that, ursuant to court stipulations signed last February, CUC has established with the Bank of Guam two new accounts—the operation and maintenance account and the pipeline inspection account.

Cruz said the operation and maintenance account has a $475,000 deposit, while the pipeline inspection account has a deposit of $275,000 withdrawn from the Technical Manager for Oil fund.

CUC has agreed with the U.S. government’s recommendation that CUC establish 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 properly spent.

EPA and CUC have agreed that CUC shall maintain a separate account to ensure the effective long-term operation and maintenance of new and existing oil infrastructure.

The parties have agreed that, starting last July 31, and each year after, CUC shall deposit $475,000 in the O&M account every year for 10 years.

Carter approved the agreement last February.

As for the pipeline project, Carter granted last Feb. 1 a joint request by the U.S. government and CUC to reserve $275,000 for in-line inspections of the CUC oil pipeline.

In-line inspection, also called intelligent or smart pigging, refers to an assessment of a pipeline from the interior of the pipe using an inspection tool.

The old pipeline was an aboveground pipeline that delivered fuel from the Mobil Oil facility at the Saipan port to Power Plants 1 and 2 in Lower Base.

CUC’s Environmental and Engineering Management Company has built a new fuel pipeline at the same location.