Teno asked to veto bill restoring 80-MW project

Another bidder on the 80-megawatt power plant has joined the fray in protesting government actions on the controversial project, urging Gov. Pedro P. Tenorio to veto pending legislation it said will favor only one of the competing firms.

Saipan Power Partners warned that signing into law Senate Bill 12-19 would eliminate competition and allow awarding of the $120 million contract to Enron despite what it claimed as the latter’s “more costly” proposal.

The measure, offered by Senate Floor Leader Pete P. Reyes, cleared the House of Representatives last Friday and now heads to the governor for consideration.

It seeks to force the Commonwealth Utilities Corporation to abide by the original plan mapped out years ago for the project and to nullify its recent decision to undertake fresh round of bidding for a smaller-sized plant.

But a provision in the bill suggests that only low-speed, diesel-powered generator will be permitted to be installed in the proposed plant, implying that Enron, one of the leading bidders, should win the contract since it is the only one offering such specifications among all the proposals.

For the first time, SPP and its partner, Hawaiian Electric Inc., publicly criticized attempts by local legislators to resolve the dispute on the much delayed project as it described the bill as “patently unfair to those of us who played by the rules” since the bidding began in 1997.

“[W]e are alarmed because it appears that the Legislature may not have known that the bill as drafted only allows one bidder, Enron, to be awarded the bid regardless of cost or terms short circuiting the bidding process,” said John M. Burns, project director for SPP, in a letter to Mr. Tenorio.

Noting that lawmakers may have overlooked the implication of Section 7 of the bill, he maintained that another provision on Section 6, in fact, invites all bidders to renew their proposals for further consideration.

“The Legislature would not have done this knowing that only one bidder would meet the bill’s criteria. Such a conclusion would be neither logical, fair, nor genuine; so it could not have been known,” added Mr. Burns.

Cheaper

SPP believed the Legislature might also have been unaware that Enron’s bid was “substantially more costly” than other proposals, particularly its bid, that had offered medium-speed diesels.

To back up its claim, it cited results of the independent evaluation conducted last year by Burns & McDonnell, the private engineering firm hired by CUC in response to mounting protests to its earlier choice of Marubeni-Sithe.

According to Mr. Burns, SPP’s annual fixed cost was $8 million per year cheaper than Enron’s, while other bidders also proved to be less costly than the front-runner.

“This ‘fixed cost’ is the charge that CNMI citizens will have to pay each year for the 25-year term of the contract even if no power was produced by the plant,” he explained. “That means that the Enron offer will cost the citizens of Saipan $200 million more than our SPP offer even if it does not run.”

The difference in costs between a low-speed and medium-speed generators is even more pronounced if the plant is scaled down to 60-MW as proposed by the government-owned utility corporation.

Medium-speed engines, Mr. Burns pointed out, are less costly and less polluting while still being highly reliable. “The Legislature could not have meant for the citizens to spend hundreds of millions more for their power by biasing the result in favor of slow-speed engines,” he added.

Instead of enacting SB 12-19, Mr. Burns said they would support a final bidding process in which the three leading bidders — Enron, the Tomen consortium and SPP/HEI — would compete in a three-way race for proposed plant based on who has the lowest bid price.

“To simply award it to Enron either by mistake, or as a prize for being the best at lobbying, at the expense of your utility customers is not right,” he told Mr. Tenorio.