A local partner for a California-based investor for a $40- million, 20-megawatt solar photovoltaic power plants on Saipan signed a “profit sharing” deal with Gov. Benigno R. Fitial and the Department of Public Lands as early as Oct. 11, 2011, but the Commonwealth Utilities Corp. has yet to sign a contract and a 25-year power purchase agreement with the company a year later.
Under the “profit sharing program” that the administration developed, lessee Eco Island Development LLC is provided access to public lands “without charge” until the project becomes profitable.
Herman Sablan, vice president of Eco Island Development LLC, said his company is the local consultant and partner for California-based American Capital Energy Co.
ACE has been waiting for a contract award from CUC since last year.
The profit sharing for the government is the amount to be paid to DPL based on the terms and conditions or rental payment schedules laid out in a “lease agreement.”
Some lawmakers told Saipan Tribune yesterday they will be asking the Office of the Public Auditor to look into this profit sharing deal between the governor and DPL and Eco Island Development.
No lawmakers' nod needed
These solar photovoltaic power plants will be located in at least four different locations.
Sablan said in ACE project's case, the solar photovoltaic power plants will be located in five different locations.
This means there will be public lands in Obyan, Kagman, Tanapag, Dandan, and Koblerville that will be reserved for Eco Island/ACE.
Sablan said each of the reserved land is only up to 4.9 hectares, so as not to require the Legislature's approval for each of the location.
Under CNMI law, any lease and extension of lease of public land consisting of more than 5 hectares requires legislative approval.
Sablan said ACE's projected investment for the 20MW solar photovoltaic power plants is $40 million. But he said this project could just be for only 10MW.
“I am now embarrassed with the California investors because it's been a year and the contract is still under review. My guess is that they have already spent some $50,000 on research, land survey, travels, and others for this project,” he told Saipan Tribune last night.
Sablan said ACE proposes to sell power to CUC at 18 cents per kWh.
He said if CUC charges an additional 4 to 5 cents for its operations cost, then the cost to CUC customers would be 22 to 23 cents, which is still far cheaper than what CUC currently charges its customers of over 30 cents per kWh.
Sablan said he is not sure whether CUC's no-bid, $190.8-million power purchase agreement with Saipan Development LLC, which was granted the exclusive right to develop a diesel-generated electric power plant on Saipan, is among the reasons for the delay in the contract award to ACE to develop the 10MW solar photovoltaic power plants.
The no-bid $190.8-million PPA with Saipan Development LLC is among the issues connected to a resolution impeaching Fitial for 16 allegations of corruption, neglect of duty, and felony.
A Special Committee on Impeachment is holding hearings in connection with these 16 articles of impeachment. The hearings will resume this morning and are broadcast live on Channel 60 and are posted on Facebook by concerned citizen Glen Hunter.
On Oct. 10, 2011, Fitial, former DPL secretary Oscar M. Babauta, and Eco Island Development president Shen Yen signed a three-page memorandum of agreement to implement a renewable energy program in the CNMI.
The MOA spelled out the guiding principles for the profit-sharing program “developed by the CNMI government.”
These include the lessee undertaking both the investment and risk associated with the development of the renewable energy subject to support by the CNMI.
In exchange, the lessee will have access to public land without charge until the decentralized, renewable energy program becomes profitable.
“Based on the profit sharing program, the CNMI wishes to engage the services of Eco Island Development LLC to finance, build, and operate up to 20MW of solar photovoltaic power plants for the island of Saipan,” the MOA says. This MOA was amended on Nov. 7.
Profit-sharing will be included in the power purchase rate of 0.189 cents per kilowatt hour as signed in the PPA with a 5-percent increase every five years until the contract expiration.
About a month later or on Nov. 7, 2011, this MOA was amended to change the profit sharing from 5-percent increase every five years to 2.5 percent every year.
Sablan said he wrote to DPL acting secretary Ray Salas last week to let him know that there is a valid MOA between DPL and Eco Island Development.
Since last year, DPL has had three secretaries serving in acting and temporary capacities. The governor removed Babauta in March 2012, and appointed Pete Itibus as acting DPL secretary. Fitial later appointed Ray Salas as acting DPL secretary.
Salas said last night he has yet to see Sablan's letter to DPL on the MOA.
Fitial and Lt. Gov. Eloy S. Inos separately said weeks ago that the administration will pursue renewable energy despite the PPA with Saipan Development LLC on a diesel power plant.