Teno reinstates 80-MW project • Emergency Sufficiency Act 2000 invalidates CUC’s decision to scrap the power plan

The installation of power plant on Saipan with up to 80-megawatt capacity is now a law, ending months of uncertainties and bickering that have marked the bidding of the much delayed project.

Gov. Pedro P. Tenorio on Friday signed into Public Law 12-1 the bill reinstating the initial plan which the Commonwealth Utilities Corporation scrapped last January despite strong opposition from lawmakers and business leaders.

He said the legislation, called the Emergency Sufficiency Act of 2000, allows the government-owned utility corporation to proceed “without further delay” preparation for Saipan’s power needs.

At the same time, it provides flexibility to CUC to “independently” determine how to implement the recommendations drawn up by its power consultants who have assessed the island’s power load.

The new law also invalidates a decision to collapse the request for proposal and to re-bid the project with smaller capacity, paving the way for the board to award the $120 million contract under the terms of the original plan.

While the RFP issued in 1997 stipulated that CUC install the 80-MW plant, this acts permits phased-in construction of a facility with a 60-MW capacity immediately as recommended by engineering firm Burns & McDonnell.

Due to potential legal questions, the measure absolves any liability against utility officials who must, from hereon, comply with provisions of this act.
“Because this measure recognizes the need to provide CUC with the flexibility in proceeding under what is a unique and complex procurement situation, and because [it’s] primary goal… is to protect the interest of our residents in a continuous and dependable future supply of power, I sign this measure into law,” said Mr. Tenorio.

The law came barely three months following the controversial decision by the CUC board to collapse the three-year old RFP and to bring the project back to square one.

Angered by the move, Senate Floor Leader Pete P. Reyes filed the bill to force the utility corporation to stick with the initial proposal by declaring a public policy on the need for such a project.

It was also meant to legislate procurement on a project that has come under a storm of protests and been a constant source of rift between members of the Legislature and CUC.

Irregularities

According to legislative findings, CUC did not follow the advice of its independent power consultants when the board summarily canceled the RFP as two conditions were not met to arrive at such decision.

Burns & McDonnell, hired by CUC more than a year ago to review all the bids and assess the power situation on Saipan, prepared a report that was the basis of the decision reached during the board meeting last January 13.

But legislators believed re-bidding the project could lead to higher cost and further delay that would harm efforts by the government to spur business activities here.

“The Legislature rejects the notion that Saipan does not need a new 80-MW power plant. There can be no doubt about the long-run need for this capacity,” the bill explained. “The issue is not the size of the plant but of the proper time frame for adding the new generating capacity.”

In signing the law, the governor did not mention opposition by two top bidders who had asked him to veto the measure for fear that it would only favor front-runner Enron.

Both the Tomen Consortium and SPP/HEI claimed a provision in the legislation seeking installation of only low-speed generators would eliminate competition by handing the contract to the Texas-based conglomerate that has included that condition in its offer.

Although opposed to the bill in its early stages, CUC officials softened its stance after holding talks with members of the Legislature who clarified intent and meaning of some of the provisions.

With the new law, the project is now expected to run smoothly after nearly two years of delay due largely to protests by bidders on CUC’s choice of Marubeni-Sithe as its contractor.

Envisioned to meet power demand on the island, the proposed power plant will be constructed through build-operate-transfer scheme under a 25-year deal touted to be the largest ever in the CNMI’s history.