$60M for power plant repair

Some $60 million would be needed to upgrade the Commonwealth Utilities Corp.’s main power plants in Lower Base, according to the Harris Group.

In a presentation at the Legislature yesterday, Harris Group vice president Dennis Swann said that regardless of who operates the power plants, $60 million would be needed to fix the rundown power plants’ facilities and ensure efficient operations.

“I’m astounded every time I come here and see that the machines are still running. The thing is, you can’t continue the way you are now. Something must be done to fix it,” said Swann.

Swann, who is paid by the CUC to advise the agency on its power privatization program, said it may be better if the work is handled by a private company.

“A company has an established credit standing with the bank. It’s easier for them to borrow money,” he said.

But this borrowing would require a full-faith backing from the CNMI government as indicated in the CUC’s Request for Proposal, lawmakers said yesterday.

The lawmakers, headed by Vice Speaker Timothy Villagomez, chair of the House Committee on Public Transportation and Communications, and Sen. Diego M. Songao, chair of the Senate PUTC committee, cited that if the loan would require government backing anyway, then the government might just as well do the borrowing itself.

Swann said it may be economical but “I don’t know how long can you go.”

Swann said that the CUC is now down to two proposers, out of the six companies who expressed interest to handle CUC’s power generation.

“We are evaluating the two best bids,” he said.

Villagomez said that CUC projects to award the contract in October this year.

“I’m glad that I’ve finally met with [the] Harris Group and discussed issues openly. They want to award a contract this year but there are still concerns that must be addressed,” he said.

He said that CUC should resolve the issues surrounding the land ownership, emission concerns, and whether there is a need to amend Public Law 12-1, which sets the parameters on how power plants must be built and operated on Saipan.

“These issues must be clarified before any awarding of contract,” said Villagomez.

Rep. Arnold I. Palacios said the CUC should return to the Legislature and present a final proposal.

CUC wants to privatize the operations of Power Plant 1 and 2 in Lower Base.

PP1 has four old engines that were installed since CUC began operation in 1979 and four newer ones installed in 1989 and 1990. The CUC has its biggest asset in power plants, which are valued at some $109.4 million.

Under the initial plan, PP-2, which is adjacent to the main plant, shall be decommissioned or demolished. Its site would be used for the expansion of PP-1.

The CUC has four power plant generation facilities on Saipan—two in Lower Base, one in Puerto Rico, and one in Isley Field. These plants generate up to 90 MW.