BACK TO SQUARE ONE CUC to reassess Saipan’s power demand

The Commonwealth Utilities Corporation yesterday agreed to reconsider the initial plan on the controversial Saipan power plant, a move that has drew protests from bidders who feared that it would further push back the project.

Board directors voted to expand the services of independent experts to include an evaluation on the current and future power supply needs on the island and a feasibility study on the proposed 80-megawatt plant.

The government-owned utility firm will spend another $45,000 for the services on top of close to $100,000 paid to Burns & McDonnell when it undertook a nine-month reevaluation of various offers submitted for the project.

The board told the Kansas City-based engineering firm to submit the preliminary report by mid-December, before the expiration of the 90-day extension period granted earlier prior to the awarding of the $120 million power contract.

According to CUC, the study will specifically address the concerns raised by the Commonwealth Development Authority regarding the magnitude and cost of the plant.

CDA has a stake at the utility corporation, which owes the government lending agency over $100 million, and its approval is necessary for such a project.

Last month, CDA Chairman John Tenorio had asked the board to review the initial plan whether it would be necessary to scale back the power plant and lessen financial obligations to CUC in view of the economic difficulties confronting the island.

Utility officials believed the present economic conditions do not warrant such a huge power reserve, noting that a lot of businesses have closed shop over the past two years which led to lower demand for electricity.

At present, Saipan has a peak demand of only 67 megawatts which can be adequately provided by existing power generators, according to CUC.

Necessary

But the top competitors vying to build the new plant maintained the island will require the 80-MW power capacity as demand has consistently increased despite the economic crisis and that some hotel and factories have yet to hook up with CUC’s main system.

Robert O’Connor, lawyer for the Tomen consortium, questioned the necessity of the study, saying there has been no “dramatic change” that would compel CUC to downsize the project.

“CUC told us that there was an emergency need for this project as recently as June of this year when Marubeni was in first place,” he said in an interview. “I haven’t seen new dramatic change between June and now except Marubeni is not in the first place anymore.”

The Japanese corporation and its U.S. partner Sithe Energies, Inc. won the award last year during a highly-questionable procurement process that was later retracted by CUC to give way to the independent review.

Burns & McDonnell last month revealed its findings on the “best and final offers,” ranking Enron, Tomen and HEI/SPP higher than Marubeni-Sithe.

Frederick E. Lacroix, general manager of Enron Guam Piti Corp., pointed out the study would only further hamper construction of the project that has taken already more than two and a half years in procuring potential contractors.

“The independent evaluation has been completed. It is now time to make the award and get on with the project,” he explained. “They have all the research at hand. There’s no reason to delay the project at this point.”

CUC is under pressure to resolve legal disputes that have stalled the project since September last year. Designed to meet power demand by the end of the decade, it is to be constructed through build-operate-transfer scheme under a 25-year deal touted to be the largest ever in CNMI’s history.