Consortium joins protest against CUC decision

Another front-runner vying to build a new power plant for Saipan has opposed the decision by the Commonwealth Utilities Corporation to scale back the project as it contested the evaluation conducted by independent experts on various proposals submitted by bidders.

The consortium of Tomen, Alsons, Singapore Power and Tan Holdings Corp. joined other bidders in protesting the cancellation of the initial plan on the controversial project, saying CUC should instead allow the construction of the 80-megawatt generation capacity by phases.

Noting it board’s action to collapse the original request for proposal (RFP) in favor of a fresh round of bidding, this time for a 60-MW plant, the consortium believed this could set back the entire project and jeopardize the island’s economy.

In a letter signed by Joseph C. Nocos on behalf of the consortium addressed to CUC and other CNMI officials, the multinational group warned that failure to reinstate the original RFP issued in 1997 will throw to waste the work, time, money and effort by both the bidders and the government-owned utility corporation.

“This will be bad for the offerors, bad for the Commonwealth’s credibility as a site for international investment, and bad for the people of Saipan,” read the letter dated Feb. 1.

“Awarding the contract now will be fair to the offerors, more efficient for the Commonwealth, and — most importantly — will get the people of Saipan the power they need sooner,” it added.

Two issues

The consortium cited two issues that CUC is currently facing and must immediately resolve — first, the highly- opposed decision to downsize the project, and second, results of the review undertaken by Burns & McDonnell that are questionable.

Echoing the position of another top bidder Enron, the group maintained awarding the contract now and allowing a phased-in construction for the plant would ensure continuous power supply for Saipan in the next few years.

CUC, in its decision last month, voted to re-bid the project as its procurement regulations do not allow modifications. It cited the assessment made by the Kansas City-based engineering firm on the island’s load growth and the economic downturn as the basis for such an action.

“But if we have to go through the whole procurement process again from the beginning, then it will probably be five years before the 60-MW plant is ever built,” the consortium explained. “Who knows what the shape of the economy will be by that time?”

On questions regarding the nine-month evaluation on 13 proposals handed in for the project, it stressed that Enron does not have the best offer as the margin in their scoring is “statistically meaningless.”

The consortium earned 94.14 points in the scoring system of Burns & McDonnell, as compared to Enron’s 94.28 — a margin of only .14, scores that it said were based on subjective analysis of capabilities rather than concrete facts.

Cheaper

“When we look at the one cold, hard fact of the evaluation — the price — Tomen is undisputedly far ahead of Enron,” said the letter. “Tomen is millions of dollars cheaper than Enron.”

Based on the report from the independent consultants, the consortium’s levelized tariff rate per megawatt-hour is $79.26, while Enron’s is $80.62, or a difference of about $1.36.

For a period of one year, it will mean $953,088 cheaper. Over a 25-year contract, this will be equivalent to close to $24 million that will translate to savings for the CNMI if the consortium’s bid is selected.

The letter also cited other criteria in which Tomen consortium clearly has the edge, such as licensing and permitting experience where numerical errors were committed; and energy transmission experience.

In light of the reported sale by Enron of Portland General Electric (PGE), its electric transmission company, the Houston-based giant may be losing further its edge, unlike the consortium where its partner Singapore Power will remain, according to the letter.

The consortium pointed out also that CUC and Burns & McDonnell might have overlooked the “possible deviation” by Enron on RFP’s requirement to have excess capacity to ensure that 80 MW is always available.

“Tomen offers a better price than Enron. Tomen has stronger applicable experience than Enron. Tomen agrees with Enron that the contract should be awarded now with phased construction,” the consortium said.

“But it should be awarded to Tomen because its offer is the most economically advantageous complying offer,” it added.