Draft contract for Saipan power project ready

Commonwealth Utilities Corp. officials and its lawyers have finalized a draft of the contract on the new power plant on Saipan that they expect to use as its official position during forthcoming negotiations with Enron.

The board reported yesterday in its meeting that the proposed Power Purchase Agreement or PPA is now being reviewed by the Attorney General’s Office, after which they will send a copy to the Houston-based power giant for its comment.

CUC Board Chair Jesus T. Guerrero said a meeting with Enron will be scheduled within the next two weeks to begin the negotiation.

“I assure everyone that we are moving responsibly, working with lawyers and others to avoid future problems and at the end of it, we will have a good project that benefits the community,” he told the meeting.

The 60-megawatt power plant was awarded to Enron last May in a controversial decision following years of disputes between CUC and various bidders that prompted lawmakers to step in.

While protests from losing bidders are still pending with the Office of Public Auditor, CUC officials forged ahead with the project and have hired lawyers from Fulbright & Jaworski and power consultants from Burns & McDonnell to assist them.

Vice Chair Laura I. Manglona, who heads the operations committee, said they met with their lawyers in Houston and L.A. the past few months to draw up the PPA, with the recent meeting held on Saipan the other day.

“We now have arrived at, and are putting the finishing touches on, a document sufficient and suitable for presenting CUC’s initial position to Enron,” she said.

The negotiating team, according to Ms. Manglona, is working hard and diligently to ensure that CUC provides a reliable and less costly power to all its customers.

“To accomplish this at the lowest cost and so as to meet the best interests of the corporation, utility consumers and the CNMI government, the team has been, and will continue to, carefully address all the contract conditions and commercial terms for the Saipan power plant,” she added.

The PPA will be the key contract between CUC and Enron that covers scope of the power project, such as costs and commercial terms; transactions, structure, net output and guaranteed fixed rate; environmental permitting, transmission, dispatch and others.

Touted to be the largest deal ever in CNMI’s history, the project is to be installed through the build-operate-transfer scheme under a 25-year agreement.