‘Governor’s order on CUC fuel contract is invalid’

The validity of the contract recently signed by the Commonwealth Utilities Corp. with Mobil Oil Mariana Islands is being questioned by the Commonwealth Public Utilities Commission.

A June 13 report by CPUC hearing examiner Harry M. Boertzel indicated that the contract violates the commission’s regulations since CUC has yet to provide it a copy of the fuel contract, as directed by the commission.

Boertzel’s report describes a troublesome regulatory history for the over $300-million fuel contract, as recounted in the CPUC’s April 22, 2014, letter to Gov. Eloy S. Inos.

It was on March 26, 2014 when CUC filed a second amended petition for regulatory review and approval of the fuel procurement pursuant to CPUC’s Dec. 19, 2008, “Contract Review Order.”

Boertzel said that CPUC’s consultant—Georgetown Consulting—reviewed the procurement and filed a report on April 13 this year. However, on April 15, Inos issued Executive Order 2014-06, which suspended CPUC’s regulatory authority over the procurement and to authorize CUC to enter into a fuel contract without regulatory approval.

“By an opinion dated May 13, 2014, commission counsel determined that the EO is invalid, which in turn raises serious doubt about the validity of the fuel contract—absent regulatory approval…,” stated the hearing examiner’s report. This opinion was provided to the governor and CUC.

Boertzel’s report further disclosed that on May 22, 2014, the CPUC directed CUC to provide it with a copy of the fuel contract not later than May 23, 2014.

“CUC currently stands in violation of this directive. The commission should consult with its counsel regarding an appropriate regulatory response to these disturbing events concerning the fuel procurement,” added the examiner’s June 13 report.

CUC’s executive director Alan W. Fletcher had yet to respond as of press time yesterday.

CUC and Mobil inked the six-year $360 million fuel contract on May 1. Mobil Oil’s previous contract expired on April 30, 2014.

Under its previous contract, CUC owed Mobil Oil a total of $7.6 million. Of this debt, $1.3 million represents the penalties incurred by CUC for not consuming the minimum contracted amount. The remaining $6.3 million, meantime, represents all the debts CUC owes the company.