House panel wants say in power plant privatization

Hoping not to be left in the dark on the firm’s projects, a House of Representatives committee has called the Commonwealth Utility Corp. for a discussion on the planned power plant privatization and separation of water and sewer services from CUC.

CUC officials are scheduled to face members of the House Public Utilities, Transportation, and Communications Committee on Monday, Jan. 17, at the Legislature to discuss utility-related capital improvement projects, among other things.

The meeting was initiated by PUTC chair Timothy P. Villagomez following media reports that CUC was pursuing plans to privatize power generation.

“CUC has not formally informed the Legislature of its long-term goals and how it plans to achieve such goals. CUC‘s plans, if any, may greatly impact the present utilities provided to the public. As such, the Legislature should be informed and be prepared to address any issue that may arise out of any action taken by CUC,” Villagomez said in a Jan. 3, 2005 letter to CUC chair Francisco Q. Guerrero.

To prepare the lawmakers for the meeting, Villagomez asked CUC to provide PUTC copies of feasibility studies or any documentation regarding the costs and benefits of privatization.

He said his request includes the cost of services study, rate study, financial impact assessment, and generation personnel transfer or impact study.

“There are many factors that need to be considered before finalizing the privatization of any government operation. The committee desires to discuss these issues with CUC before CUC makes any decision on the matter,” he said.

Villagomez also expressed interest in learning more about CUC’s other capital improvement projects and its plan to turn over the management of water and sewer services to the central government.

The bid period for the power plant privatization ended last Friday, Jan. 7. All six pre-qualified bidders were expected to have submitted their final offer by then.

Harris Group, the consulting firm hired by CUC to do the scope of work for the project, will now evaluate the proposals and then make a recommendation to the CUC management and board of directors.

CUC has four power plants: two in Lower Base, one in Isley Field, which is not operational; and the Puerto Rico power plant, which is being petitioned by local residents to be relocated due to noise and alleged environmental pollution. The Puerto Rico plant is run by a private group.

The utility firm is also eyeing to remove water and sewer operations from its responsibility.

On Dec. 14, 2004, the CUC board of directors voted unanimously to adopt a resolution urging the Babauta administration to propose to the Legislature an amendment to the CUC Act to remove the water and sewer operation from the utility firm’s responsibility.

Currently, CUC barely earns revenues from its delivery of water and sewer services. As a result, income collected from power services is used to subsidize the two other divisions.