A first step toward CUC’s recovery

Editor’s Note: The following is the text of the speech that Commonwealth Utilities Corp. executive director Antonio Muña delivered during the official commissioning of engines 7 & 3 at Power Plant 1 on March 31, 2009, after months of overhaul.

Today is CUC’s first concrete step toward full operational recovery in providing required power production to meet demand. It has been a story of persistence and a never say die attitude.

Four years ago in December 2005, Gov. Juan N. Babauta lifted the CUC state of emergency but advised that CUC would not be able buy fuel without a continuing government subsidy. Making matters worse, the engines were in dire need of maintenance and without immediate attention, Power Plant 1 operations will eventually collapse.

In the spirit of Harry Truman, with the “buck” being passed, Gov. Benigno Fitial responded that this “buck” stops here. Despite a reduction of resources of $30 million in January 2006, the governor ensured that the lights stayed on and remitting $22 million in government funding through the end of Fiscal Year 2006. In July 2006, an emergency rate increase was implemented, allowing CUC to no longer require any government subsidy to pay for fuel purchases.

A temporary setback occurred due to an artificially imposed and unfunded rate reduction, forcing the governor to again subsidize CUC fuel purchases for a period.

In June 2006, with the Retirement Fund rejecting CUC’s application for a $40 million loan to capitalize needed maintenance, the governor secured $2.6 million in 2006, $6.5 million in 2007, and a final piece of $3.8 milliion in 2008 of OIA funding to jumpstart the rehabilitation of Power Plant 1 and bring us full circle here today.

Down to two engines at Power Plant 1 and on the verge of complete operational collapse, the governor secured emergency legislative support to allow CUC to fund a temporary power contract. On Aug 3, 2008, CUC paid Aggreko for temporary power services from loan proceeds secured from the Marianas Public Land Trust. As important, the MPLT loan also provided CUC with enough funds to pay its [independent power producers]—PMIC and Telesource were not paid for many months and were critically challenged in continuing services without financial relief. On Sept. 12, Aggreko delivered an initial 10 megawatts of temporary power, with a full complement of 15 megawatts installed by Sept. 30.

In August 2008, with our local boys at a point of physical and mental exhaustion, legislation was enacted to allow for CUC to employ skilled nonresident labor to bring relief and reinforcement to the maintenance effort at Power Plant 1.

In October 2008, having evaluated bids to overhaul Engines 7 and 5, CUC determined that contracting for the overhaul would exhaust all identified funding not only for the overhaul but also critical improvements to other generators and equipment to ensure reliable targeted power production of 40 megawatts from Power Plant 1. CUC then decided to embark on the overhauls and plant rehabilitation on its own.

In December 2008, the governor was able to secure an additional $3.8 million from OIA to allow for the Rehabilitation Repair Plan to be implemented. Mr. Wallon Young would join us on Feb. 3, 2009, and, as to plan, we are here today commissioning engines 7 and 3 to bring 15 megawatts of available power production to the grid on the way to 40 megawatts by Sept. 30, 2009 from Power Plant 1 generators.

It has been a long and tough road to this point and is by no means at an end. CUC continues to be challenged and to fight its way to full financial recovery/solvency, improving and rehabilitating all three utility systems (power, water, and wastewater), plus meeting demands of its customers for reliable power, water and wastewater services.

We are thankful and very grateful for the support of the governor, the Legislature, and OIA and look forward to their continued support as CUC see its way to full recovery.

I would like to especially thank the CUC Power Plant management, staff, and employees who continued to remain dedicated and saw CUC through its darkest (brownouts and blackouts) hours without relief and reinforcement.

And also in gratitude to CUC private sector partners in production—Mobil, Shell, PMIC, Telesource, and Aggreko for their patience and support.