NMHC cancels $5M power plant hardening project

Jesse S. Palacios

The Northern Marianas Housing Corp. was forced to cancel the Commonwealth Utilities Corp.’s Power Plant 1 Hardening Project worth $5 million as CUC was unable to complete its application to avail of the Community Development Block Grant-Disaster Recovery grant funding.

It was learned at a joint hearing by the Senate and the House of Representatives’ Public Utilities, Transportation, and Communications committees Thursday that NMHC had to cancel last December the Power Plant 1 Hardening Project because, according to NMHC corporate director Jesse S. Palacios, it’s already been a couple of years since they asked CUC for its application, but its application was still incomplete due to various issues.

Palacios said this hardening project was meant to replace the shell of the power plant, which was damaged by not just Super Typhoon Yutu in 2018, but also by Typhoon Soudelor in 2015.

Rep. Vincent S. Aldan (Ind-Saipan), who chairs the House PUTC Committee, pointed out that CUC just bought one brand-new power generator engine and they are going to put it in a dilapidated Power Plant building in Lower Base.

“That sounds like we’re putting the cart before the horse,” Aldan said.

House floor leader Rep. Edwin K. Propst (D-Saipan) said he’s just a little bit shocked that somebody dropped the ball on this project—not at NMHC, but certainly somebody at CUC.

“We’re looking at a potential $5 million that would have basically been given to CUC to do a project that is rather important,” Propst said.

Aldan and Senate PUTC Committee chair Sen. Paul A. Manglona (Ind-Rota) presided over the joint public hearing, which was intended to obtain an update on the status of projects under the $243.9-million CDBG-DR grant agreement.

In explaining the CUC Power Plant Hardening Project, Palacios said that what CUC told them was that when the power plant was damaged, it took Saipan more than a couple of months to recover because the water got into the power system. Palacios said that, according to CUC, they had to first dry out everything before they could actually turn on the power plant.

He said the various issues with this project is the presence of asbestos and the power plant is located in a floodplain.

Palacios said all these environmental issues have to be addressed even prior to providing money to CUC for architecture and engineering, or A&E design, and to go over the request for proposals process.

Palacios agreed with Rep. Marissa Flores (Ind-Saipan) that CUC, as an autonomous agency, must provide NMHC with the A&E design before the project could proceed. He said the funding for A&E design was supposed to come out of the $5 million. Palacios said NMHC does not have any architects in house that can provide such A&E services.

“We need the plan anyways to bid out the project. If CUC does not move, it’s problematic because we have a deadline to meet,” he said.

Palacios said this CDBG-DR is a six-year grant and that they are now approaching its third year.

Palacios said that, as previously mentioned by NMHC deputy corporate director Zenie P. Mafnas, even before NMHC received the CDBG-DR money, they contacted all government agencies so they can prepare and vet these projects because of the timeline that must be met.

“So we weren’t really waiting for the grant agreements to be signed. We were already doing the work prior to that,” Palacios said.

He emphasized that this CDBG-DR funding is a last resort type of funding, which means they all have to exhaust other fundings from the Federal Emergency Management Agency, Small Business Administration, or even insurance proceeds before availing of CDBG-DR.

With CUC’s dropping the ball on this project, Propst said it’s the ratepayers who suffer the consequences.

“And that’s the frustration I have as a ratepayer. And I’m sure everyone else does,” said Propst, describing the funds as “a gift in a sense.”

Propst said this is extremely disappointing. He suggested that they could call in CUC and find out exactly who dropped the ball on this, and why and how they allowed it.

When asked if CUC can still avail of this grant funding, Palacios said they will have to look into that because of the six-year time limit for their programs. “We don’t want to give back to the federal government the money that that was given to us to help restore and make our islands resilient,” Palacios said.

He said that, due to escalating costs of materials and labor, Palacios said he is certain it’s going to cost more than what they budgeted. “So we have to play around with the money that’s been lost to a certain agency,” Palacios said.

House vice speaker Joel Camacho asked if the funding is specific to this project, or is there any way NMHC could allocate the $5 million for something else. Palacios said the CDBG-DR money came “from like a big pot” and the $5 million is the allocation from that pot to this hardening project.

Palacios said there are other projects in the CNMI that require more funding and what they’re going to do is to get the money from canceled projects and reallocate those monies to the projects that need funding.

Sen. Celina R. Babauta (D-Saipan) said it blows her mind that CUC would buy a new engine and put it in a building that’s not going to be protected.

“Did you notify [CUC executive director] Gary Camacho about this? What was his reaction? We don’t care?” Babauta asked.

Palacios said they can’t really answer that, but what they also asked CUC was if they were to put $5 million to harden the existing power plant, are they going to stay in the same location for the long term?

“Because if not, then you have to pay that back. If CUC is planning on relocating to a place that’s on higher ground, they have to pay back the $5 million. But they said they’re going to be there for a long haul,” Palacios said.

NMHC CDBG-DR program manager Kimo Rosario said it was not until they canceled the hardening project that CUC requested for reconsideration.

Rosario believes, though, that the funding has already been reallocated to cover the shortfall at the Northern Marianas College.