Lawmakers OK $3.4M for CUC

Lawmakers rushed to passage yesterday a bill earmarking $3.4 million to help the Commonwealth Utilities Corp. pay for temporary power and settle its debts to two contractors.

The bill, introduced on the floor of the House of Representatives for the first time yesterday, sailed through the Lower House by a 12-6 vote. The bill was immediately sent to the Senate, which passed the bill with five votes and one abstention.

Press secretary Charles P. Reyes Jr. said that Gov. Benigno R. Fitial had intended to sign the bill into law yesterday, but the measure was not transmitted to the Governor’s Office in time. The legislation is expected to become law on Monday.

The measure, titled the “Emergency Power Generation Act of 2008,” earmarks the Marianas Public Land Trust’s earnings for the next two fiscal years to CUC. MPLT, which is tasked with investing money collected from the use of public lands, remits approximately $1.7 million a year to the central government for appropriation by the Legislature.

Specifically, the bill appropriates $1.5-million for Aggreko International, which CUC has hired to provide up to 15 MW of emergency power to Saipan. Aggreko won’t bring the rental generators into the island until CUC makes a down payment of $1.5 million.

The bill also sets aside $1.1 million for CUC’s debt to Pacific Marine Industrial Corp., which runs Power Plant 4 on Saipan, and $800,000 for CUC’s debt to Telesource CNMI, which operates the power plant on Tinian.

The bill also requires CUC to return the money by starting a residential consumer program within 18 months of the bill becoming law. A total of $3.4 million should be paid in consumer rebates over a three-year period—or by January 2013 at the latest.

Proponents of the legislation believe that CUC will be able to able to provide 24-hour power service once the rental generators are operational. They also argue that the availability of emergency power will buy CUC additional time to repair its engines.

Currently, CUC generates only two-thirds of Saipan’s power demand. Power Plants 1 and 4 produce a total of 27.2 MW, while the peak demand is 41 MW. As a result, Saipan residents are plagued by at least two hours of power outages a day.

Rep. Diego T. Benavente, who voted in support of the bill, said the situation calls for an emergency solution. “There must be a long-term solution to the CUC problem, but for now, we have to look at the current situation. CUC needs this money to avoid power outages, and to keep PMIC from shutting down and taking more generation capacity away,” he said.

Rep. Joseph Reyes, also a supporter of the bill, said the government will lose more than $3.4 million if the power outages continue. “The government is paying people even during hours they cannot work due to power outage. At the same time, we’re losing out on taxes because the businesses cannot operate. Let’s look at this from the economic perspective,” he said.

Opponents of the bill said that passage of the legislation is tantamount to endorsing CUC’s failed contracts and other past mistakes.

Rep. Heinz Hofschneider criticized CUC for executing the Aggreko contract even though there was no money to pay for it. He also questioned the legality of reviving the two-year-old procurement process that eventually led to Aggreko’s contract.

Rep. Edward Salas said he was not convinced that the lease of generators is the best available solution to the power crisis. He cited the rehabilitation of Power Plant 2 as a possible alternative.

In 2006, CUC hired the Commonwealth Industrial Supply Co. Inc. to repair Power Plant 2 at a cost of nearly $900,000. CISCO failed to fix the engines. Authorities are now investigating the contract.

CUC’s credibility was a major concern for Rep. Tina Sablan, who suggested that CUC should not be trusted with another bailout money until the utility provides updated financial statements and a clear plan for solving its financial troubles. “The Legislature just keeps pouring money into CUC with no end in sight,” she said.

Hofschneider, Salas and Sablan, along with Reps. Rosemond Santos, Joseph James Camacho, and Francisco Dela Cruz, voted against the bill. Reps. Ralph Torres and Ray Yumul were absent.

The Senate debated on the bill for about an hour before passing it. Sen. Luis Crisostimo abstained.