Enron, CUC to finalize deal

Negotiations between the Commonwealth Utilities Corporation and Texas-based Enron on a final deal on the controversial Saipan power project are expected to begin in the next few weeks as CUC concludes its search for legal counsels.

The government-owned utility firm has also begun addressing protests lodged against conditional grant of the estimated $120 million contract to Enron with letters sent to other bidders informing them of the development, according to officials.

CUC is close to selecting a U.S. mainland law firm to represent the agency in the forthcoming negotiations on the contract, said Board Chair Jesus T. Guerrero, adding that an announcement will be made by early next week.
At the same time, Mr. Guerrero disclosed that they are also in discussions with a number of local law firms for representation in its day-to-day operations.

The power project has come to a halt following the board’s split decision last May 26 to award the contract to Enron, largely due to lack of legal representation since its long-time legal counsel, Bill Ohle from the Attorney General’s Office, resigned.

Discussions with Enron will focus on the terms of the contract, including price — a process that the board said will require legal expertise as well as technical advice from its independent power consultants.

The winning bidder will be formally notified of the conditional award in the next few days, according to Mr. Guerrero.

“When our local legal counsel is onboard, we will move swiftly to address the issues raised in the protests and to plan for contract negotiations,” he said during yesterday’s board meeting held at CUC’s corporate office in Joeten Dandan.

Wide interest

Although the emergency procurement for legal services last May attracted just one proposal — from Senate legal counsel Steve Woodruff, the board decided to sole-source the contract in a move to expedite negotiation on the power project.

Several law firms responded to the call, with those under consideration have international branch offices, as well as departments and practice specialties related to energy and utility-related matters, according to the board chairman. These included O’Melveny & Meyers, Fulbright & Jaworski, Latham & Watkins, Crowell & Moring and Thelan Reid & Priest.

He declined to name the CNMI firms that are hoping to provide legal services to the utility corporation, saying only that an announcement will be made by next week when a deal has been struck.

But he stressed that CUC needs both local legal representation for day-to-day operations and stateside-based counsel to provide the “specialized representation needed to negotiate contracts” such as Enron’s.

“Our search for a contract negotiator is necessary because we know that such unique and specialized legal contracts are the focus of a very small number of national and international firms,” added the chairman.

Protests letter

The 80-megawatt power plant on Saipan reinstated under a recently enacted law has come under a storm of protests over the last two years, the latest of which stemmed from its choice of Enron.

Two other front-runners — the consortium of Tomen, Alsons, Singapore Power and Tan Holdings; and Saipan Power Partners/ Hawaii Electric — have opposed the CUC’s decision, citing a flawed report prepared by its consultants from Burns & McDonnell as well as failure to determine requirements for the 60-MW plant that will be initially installed.

They have also called for another round of bidding between the three top finalists to give CUC the best deal as they were in “statistical deadheat” which made their proposals “essentially equivalent.”

All 13 firms who submitted bids have been informed of the protests, giving them 10 days to give comments to the CUC for its actions.

Mr. Guerrero assured that the board will continue to retain services of Burns & McDonnell to help them out in the final negotiation phase “if the legal firm requires” the engineering firm to be in the discussion, particularly the scope of work involving installation of the 60-MW plant.