Despite multiple calls for an investigation since August, a lawsuit and an impeachment proceeding arising from a no-bid, $190.8-million power purchase agreement, the Fitial administration has still not conducted a full economic analysis on the 25-year deal to help determine whether it is in the best interest of the CNMI and its utility customers.
Earlier statements from the administration suggested ongoing full economic analysis, but this is not really the case, to the surprise of members of the Special Committee on Impeachment yesterday.
This and other details about the $190.8-million power deal came to light during yesterday's continuation of impeachment hearings related to a resolution impeaching Gov. Benigno R. Fitial on 16 allegations of felony, corruption, and neglect of duty.
Commonwealth Utilities Corp. acting executive director Alan Fletcher, in responding to a question from Rep. Frank Dela Cruz (R-Saipan), said he recalls that the governor was present in one of the meetings with investors connected to the $190.8-million power deal in July.
Fletcher told the impeachment panel that there is no full economic analysis being done.
“The answer is no. We have not conducted a study,” Fletcher told members of the Impeachment Committee, referring to a full economic analysis.
Press secretary Angel Demapan, when asked for comment yesterday, confirmed that there is still no such full economic study yet.
“A proposal was received by an interested party, but after reviewing the proposed scope and costs, the administration found that it was inappropriate. In an effort to secure the best proposal to conduct the analysis, the administration decided to issue a request for proposal pursuant to procurement rules and regulations. Legal counsel Jim Stump is now finalizing the details of the RFP that will be going out for announcement in the next week or so,” Demapan told Saipan Tribune.
Impeachment Committee chair Joe Deleon Guerrero (R-Saipan) pointed out that Lt. Gov. Eloy S. Inos directed CUC to conduct a full, detailed economic analysis when news came out that a $190.8-million power deal had been signed.
At the time, Fitial was on a three-week off-island trip for official and personal reasons.
Fletcher said the governor designated Stump to be in charge of conducting that full economic analysis.
Deleon Guerrero asked whether Fletcher is again “out of the loop.”
“My understanding is it hasn't been procured at this time,” Fletcher responded.
Fletcher was among those who voiced concerns about the project and called for a full economic analysis weeks prior to Fitial and former attorney general Edward T. Buckingham signing the power purchase agreement on Aug. 3. CUC consultant economists.com also recommended a full impact analysis prior to finalizing any agreement, to no avail.
Because of this continuing lack of a full analysis, the Impeachment Committee could only ask for Fletcher's and chief financial officer Charles Warren's “personal and professional opinion” yesterday.
Rep. Tony Sablan (R-Saipan) asked Fletcher whether in his opinion the PPA is good for CUC and its customers.
“I do not believe the current PPA is in the consumers' best interest,” replied Fletcher, but pointing out that it was his opinion and because there is still no full economic analysis done. He also said in his interpretation it was part of the plan to privatize CUC, which the Fitial administration has been pushing for years.
Deleon Guerrero also repeatedly pointed out that nothing in the PPA or the contract guarantees that residential customers, for example, would pay lower than over 30 cents per kWh if Saipan Development LLC builds a new 50-megawatt diesel power plant.
Fletcher said he has the same reading of the contract and PPA.
In responding to Deleon Guerrero on the Fitial administration's assertion that the PPA would guarantee a 10 percent or greater power efficiency compared to what CUC currently obtains, Fletcher said the agreement is not specific about this.
Deleon Guerrero and other members also pointed to what could be an overpriced 50MW diesel power plant, based on former CUC executive director Abe Malae's estimate that it should cost only $50 million to $60 million.
Warren also said he does not think the current agreement would guarantee much lower rates for customers. He said it would still be around 30 cents per kWh. He added that a full economic analysis will help determine this.
Dela Cruz (R-Saipan) also asked whether in Fletcher's opinion Saipan needs a new 50MW diesel power plant. Fletcher said “yes,” but added, “But I don't know if this agreement is the right vehicle.”
The Impeachment Committee also called in yesterday Public Auditor Michael Pai and Office of the Public Auditor legal counsel George Hasselback. They were dismissed within minutes because OPA is conducting an investigation into the $190.8-million power deal.
The panel also called in Procurement and Supply Division director Herman Sablan, but was also dismissed after it was established that the division didn't review or approve the contract because CUC has its own procurement regulations and CUC was and is still under emergency declaration.
The committee also called in Department of Public Lands acting secretary Ray Salas to talk about the proposed public lands that would be needed for the project that the administration said is tied to a multimillion shipyard project in Lower Base.
Other details discussed during yesterday's hearing were already known to the public, including the nature and composition of Saipan Development LLC, which bagged the contract, and the specific concerns about the PPA and the contract.