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Monday, April 21, 2014

Buckingham, Fitial sign off on $190M power purchase deal
Lawmakers ‘surprised’ by deal just weeks after buyout of another IPP contract

A day before leaving the CNMI as attorney general, Edward T. Buckingham signed off on a 25-year power purchase agreement with a private company granted “exclusive right to develop a diesel-generated electric power plant” on Saipan for a total “guaranteed price” of $190 million, documents obtained last night by Saipan Tribune show.

Gov. Benigno R. Fitial also signed off on the 41-page agreement.

Fitial left Saipan yesterday for a three-week off-island trip. No date is indicated on the governor’s signature.

The private company getting the contract is Saipan Development LLC, a private company organized in Delaware.

A representative from Saipan Development LLC has yet to sign off on the document, based on the documents obtained.

Under the agreement, the Commonwealth Utilities Corp. will pay Saipan Development LLC “300 consecutive, equal monthly installments of $636,091.”

Three hundred months is equivalent to 25 years. If the monthly payment is $636,091, then the yearly payment is $7.63 million. That is equivalent to $190.8 million in 25 years.

Payment of the guaranteed price “is not subject to alteration, adjustment, setoff, counterclaim, abatement or Force Majeure.”

In addition to the guaranteed price, CUC shall pay Saipan Development LLC an operations and maintenance fee of 0.0191 cents per plant-produced kWh per month.

CUC shall also pay a production fee of .0153 cents per plant-produced kWh to cover the costs of lubricant oils consumables and spare parts.

Pursuant to the agreement, Saipan Development LLC “has agreed to build, operate and own the [power] plant to be developed on Saipan and CUC has agreed to accept electricity generated by the plant upon the terms and subject to the conditions set…”

Before leaving

Buckingham signed off on the document on Aug. 3, 2012, or two days after announcing his resignation. Aug. 3 was his last day of work, before using his 30-day annual leave.

Buckingham left Saipan early morning hours of Aug. 4, right after he was served a penal summons to appear in court in connection with criminal charges that the Office of the Public Auditor filed against him. A day later, he rescinded his original resignation.

On Aug. 13, Fitial announced that Buckingham resigned anew for personal and medical reasons.

Sen. Frank Cruz (R-Tinian), chair of the Senate Committee on Executive Appointments and Government Investigations, reiterated yesterday that despite Buckingham’s resignation, the panel will continue its investigation into the former AG, the Department of Public Safety and the Commonwealth Ports Authority.

The probe is in connection with the use of armed police and ports police officers, government vehicles, and other resources to escort Buckingham and his wife, and allegedly to protect the then AG from being served a penal summons.


Lawmakers, when asked for comment last night, said they were “surprised” to learn of such a power purchase agreement.

Sen. Juan Ayuyu (Ind-Rota), chair of the Senate Committee on Public Utilities, Transportation and Communications, said he was surprised when he learned about the power purchase deal yesterday, and immediately asked for a meeting with CUC officials to talk about this deal. That meeting is set for Thursday at 2:30pm.

“The PUTC Committee would like to hear from CUC what this contract is all about, and why we are hearing about it only now,” Ayuyu told Saipan Tribune.

Ayuyu said over $600,000 a month in payment is a big sum of money.

The Rota senator said the PUTC Committee also wants to know the local representatives for Saipan Development LLC.


Ayuyu said it is also surprising that CUC or the CNMI government is entering into a new agreement, only weeks after CUC entered into an agreement to buy out the contract of independent power producer Pacific Marine & Industrial Corp., or PMIC, for $7.25 million. This will be paid in installments for 27 months.

PMIC used to operate Power Plant 4 station in Puerto Rico.

Rep. Frank Dela Cruz (R-Saipan), chair of the Saipan and Northern Islands Legislative Delegation’s Public Infrastructure Committee, said last night he’s not aware that the government has been negotiating with another private company to produce diesel-generated electric power plant, when he thought the government or CUC is now looking towards renewable energy.

“We are back to where we were,” Dela Cruz said in a phone interview.

He said he has yet to see the power purchase agreement between CUC and Saipan Development LLC.

Dela Cruz echoed Ayuyu’s statement that this agreement came shortly after a buyout deal with PMIC.

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