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Clarifications
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Posted on Dec 05 2013
A series of recent op-ed pieces in the Saipan Tribune have misquoted many of the terms in the power purchase agreement being promoted by Saipan Development, LLC. I’d like to provide the correct facts:
1. Per the op-ed, this is a $70 million purchase. This amount is mentioned nowhere in the contract. What the contract does have includes:
a) a guaranteed monthly payment by CUC of $636,091 for 300 months, or $190,827,300 for the 300-month period (Article 6, Section 6.4 “Guarantee Price”)
b) an operations and maintenance fee of $0.0191/kWh of plant production. This will equal about $4,600,000 per year at current production levels (Article 6, Section 6.5 “Operations and Maintenance Fee”)
c) a production fee of $0.0153/kWh of plant production. This will equal about $3,700,000 per year at current production levels (Article 6, Section 6.5 “Production Fee”)
d) CUC continues to buy fuel for the plant
2. Per the op-ed, the contract guarantees a 10-percent cut in power bills. What the contract really says:
a) “The Parties intend that the Plant will produce electricity with a percent (10%) or greater efficiency than currently obtained by CUC (Article 2, Section 2.16(a)), HOWEVER
b) “Failure to achieve the intended fuel efficiencies or cost reduction shall not constitute an Event of Default…” (Article 2, Section 2.16(c)). This means the 10-percent cut is not guaranteed, and there is no penalty to SDLLC for failing to deliver the savings.
3. Per the op-ed, the contract calls for SDLLC to sell power to CUC for $0.20/kWh. This is not stated anywhere in the SDLLC PPA.
The power purchase agreement is a public document and available upon request.
[B]Charles Warren[/B] [I]CFO, Commonwealth Utilities Corp.Dandan, Saipan[/I]
