Former Commonwealth Utilities Corp. executive director Abe Utu Malae admitted to Saipan Tribune that he was not aware and was not privy of any plan or contract for the cash-strapped utilities firm to purchase a new power plant.
Early this month, a $190-million, 25-year power purchase agreement was signed by Gov. Benigno R. Fitial and former attorney general Edward T. Buckingham, just days before they both left the island. Buckingham resigned from his post, while Fitial is on an official business trip.
In an email to Saipan Tribune yesterday, Malae believes it is unnecessary for CUC to purchase a new power plant, citing the progress of the agency in refurbishing the Power Plant 1.
“I was not privy to this contract to purchase a new power plant but I do recall one of the legislators asking me at one of the hearings on Capitol Hill if CUC should just buy a new [diesel fired] power plant? My response was it was unnecessary because the continuing refurbishing of Power Plant 1 was making it more and more efficient,” he said in an email.
Last July 1, CUC bought out the contract of independent power producer Pacific Marine Industrial Corp. for Power Plant 4 in the tune of $7.2 million to be paid in a 27-month term. The buyout would cost over $300,000 in monthly payment to CUC. The intention of CUC is to cut on expenditures and utilize Power Plant 4 for emergency loading only.
“Now that Power Plant 4 can be placed on standby, even greater overall generation efficiency for Saipan will be realized. That efficiency flows to the customers thanks to the way the fuel surcharge (levelized energy adjustment clause) is computed,” said Malae.
The former executive director, however, revealed that “if a major improvement in RICE (reciprocating internal combustion engine) technology has been recently developed and of which I am unaware, then it is hoped that that technology is manifested in the proposed power plant.”
He said it is a fairly straight forward engineering and economic exercise to determine if the new power plant makes sense.
Malae, who resigned last May due to perceived conflict with the Executive Branch, refused to comment further about the $190-million contract with Saipan Development LLC, citing he has not read the contract itself.
“I can understand the intent though: commission a new plant that will dramatically lower electricity costs to the people of the CNMI yesterday!” added Malae.
Fitial accepted Malae's resignation in May saying a leadership change at CUC is “necessary” and that the administration is not seeing evidence of aggressive action to seek out viable alternative energy sources that would provide cheap power to customers.
Saipan Tribune earlier inquired with CUC acting executive director Alan Fletcher about his thoughts on the new power deal. But Fletcher refused to comment and referred all media inquiries to the Executive Branch.
During last week's hearing at the Legislature, Fletcher admitted that he was present when the contract was signed by the governor and the former AG.
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