While the power purchase agreement's “guaranteed price” is $190.8 million for 25 years, it could actually cost the CNMI way more than $200 million because taxpayers also have to pay for fuel, operations, and maintenance fee, among other things, even as Gov. Benigno R. Fitial and former attorney general Edward Buckingham are being criticized for keeping under wraps yet another “sole-source” contract.
The 25-year agreement with Saipan Development LLC is among the most expensive government contracts in CNMI history.
As of last night, there's no telling yet whether the contract is now being fully executed.
Some lawmakers, including Senate President Paul Manglona (Ind-Rota), Sen. Juan Ayuyu (Ind-Rota), and Rep. Frank Dela Cruz (R-Saipan), separately said yesterday they will be asking the Office of the Public Auditor to investigate the contract award.
Manglona and Dela Cruz said the Public Utilities Commission, which is now functional, should step into the picture and review such contract.
“I would do everything I can to block this contract from being fully executed at least until all the details are scrutinized. You are talking about a 25-year obligation by the government and it's going to be the CNMI people paying for it,” Dela Cruz said.
Fitial placed CUC under a state of emergency, placing CUC under his direct control.
The 41-page power purchase agreement grants Saipan Development LLC an “exclusive right to develop a diesel-generated electric power plant” on Saipan.
Delegate Gregorio Kilili Sablan (Ind-MP) said yesterday that “once again, Governor Fitial has shown that he has no respect for the people of the Northern Mariana Islands.”
“First, he declared a CUC emergency, then, using his emergency powers, he signed us all up to pay over $200 million over the next 25 years. And for what?” Sablan told Saipan Tribune.
Sablan said Fitial “apparently signed this sole-source contract under his emergency declaration. How can a project that likely won't be shovel-ready for years, be considered a solution to a so-called 'emergency' and circumvent the normal CNMI procurement process?”
“We have no information about what the governor has committed Northern Mariana Islands ratepayers over $200 million for. CUC was largely bypassed. CPUC was bypassed. The Legislature was bypassed. The public was bypassed. The only person the governor consulted was AG Buckingham, just as he slipped out of the Commonwealth,” Sablan said.
The delegate said Fitial himself “has conveniently disappeared” from the CNMI “before news of his “midnight deal” with Saipan Development LLC became public.
“Now we are all stuck, wondering what this means for our CUC bills for the next 25 years. Maybe the governor has struck a wonderful deal with this five-month-old company. But if it is such a good deal, why was he afraid to let us all see it? Why was he afraid to let the normal procurement process take place before committing all of us to a bill for over $200 million?” Sablan added.
There was no request for proposal, or RFP, issued on the project.
There was, however, a “request for expressions of interest for the purchase or operation of public utilities” that CUC put out. But CUC itself said it was a “non-binding, informal market survey.”
Manglona, for his part, said the timing of the contract signing is alarming, given that Buckingham signed off on it on his last day of work and a day before he left the CNMI which was also shrouded in controversies.
Documents obtained didn't show the date Fitial signed off on the agreement. A representative from Saipan Development LLC also has yet to sign the deal based on the same documents.
“Why did the governor declare a CUC emergency? Now it seems he used the emergency declaration to get as much contracts signed to circumvent PUC review,” Manglona said, adding that former CUC executive director Abe Malae may have been fired by the governor for opposing a contract such as the one the governor and Buckingham signed.
Buckingham was escorted by armed police and ports police officers to the airport, allegedly to help shield the then AG from being served a penal summons in connection with criminal charges that OPA filed against him.
Fitial and Buckingham's signing of the contract was known to only a few individuals, because not even top Commonwealth Utilities Corp. officials nor acting governor Eloy S. Inos were made aware of it only the past 24 hours or so.
CUC was not even a signatory to the power purchase agreement.
Acting press secretary Teresa Kim, when asked for comment, said Inos received a “copy” of the power purchase agreement only yesterday morning “and is currently reviewing it.”
Kim said the acting governor does not have the original contract.
Fitial made Inos in charge of renewable energy efforts with respect to CUC, which the governor placed again under a state of emergency.
Sablan asked, “Whatever happened to plans to move away from fossil fuels and into alternative energy?”
“I call on acting governor Inos to make every detail of this contract immediately available to the public with a full explanation of the purpose and justification for this new debt of over $200 million” Sablan said.
Senate PUTC meeting
Ayuyu, chair of the Senate Public Utilities and Communications Committee, called for a meeting this afternoon with CUC acting executive director Alan W. Fletcher and other CUC officials about the contract.
“We are not saying it's good or bad contract, but we want to hear from CUC. I understand CUC is under a state of emergency, but CUC has to know first [if there's such a contract like this],” he said.
Dela Cruz, chair of the Saipan and Northern Islands Legislative Delegation's Public Utilities and Infrastructure Committee, said he will also be attending the meeting to know more about the contract and the circumstances leading to the signing of the contract.
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 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.
Fitial and Buckingham signed the power purchase agreement just weeks after a CUC buyout of a 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.