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Monday, April 21, 2014

Two CUC officials testify in lawsuit over $190.8M PPA

The Senate, Rep. Janet U. Maratita (IR-Saipan), and Sen. Ray A. Yumul (IR-Saipan) yesterday called to the witness stand two officials of the Commonwealth Utilities Corp. who testified in connection with the lawsuit over an allegedly illegal $190.8-million power purchase deal.

Attorney Ramon K. Quichocho, counsel for plaintiffs the Senate, Maratita, and Yumul, presented their witnesses—CUC chief financial officer Charles Warren and CUC deputy director for power Wallon Young.

Warren testified, among other things, that under the CUC procurement regulations, contracts are required to go through him for fund certification.

Warren said he did not review the power purchase agreement and did not sign or approve its final version.

Young spoke more on the details and logistics of the power purchase agreement such as building a substation to connect a new power plant that will cost $9 million and the decommissioning and removal of the old station and power plant with estimated expenditure of $3 million.

After the testimony of Warren and Young, Quichocho rested its case.

Superior Court Associate Judge David Wiseman continued the hearing on Wednesday at 1:30pm to allow attorney William Fitzgerald, counsel for the Delaware-based Saipan Development LLC, to present their witnesses.

In an interview after the hearing, Quichocho said the hearing is something like a preliminary injunction all over again because Wiseman wanted to give Saipan Development LLC the opportunity to present evidence and argue against the preliminary injunction.

With respect to Warren’s testimony, Quichocho said it goes to show the hardships that CUC is going to have to go through, but subsequently going to pass on to the consumers.

Quichocho said CUC has to come up with $18 million in their estimates just as a preliminary matter to satisfy their obligations under the power purchase agreement.

“What we heard from Mr. Warren also is that the procurement regulations were not followed at least as to him. He spoke from himself that he did not review it,” Quichocho said.

On Young’s testimony, Quichocho said Young made it very clear that without the new substation for the new power plant, CUC cannot decommission the old one.

“So upfront expenditure is necessary,” the lawyer added.

Fitzgerald in a separate interview said they are just trying to get the injunction lifted.

“Our position is the injunction is not necessary anymore because the government says they will not go forward with the deal,” Fitzgerald said.

Quichocho said they want a court-ordered permanent injunction to stop the agreement.

Early this month, the plaintiffs amended their lawsuit against Gov. Benigno R. Fitial, former attorney general Edward T. Buckingham, CUC, and Saipan Development LLC over the alleged illegal power purchase agreement deal.

The plaintiffs asked the court to declare that the 25-year power purchase agreement is “unconstitutional, illegal, unconscionable, and unjust, and therefore, cancelled.”

On Aug. 31, 2012, Wiseman granted the plaintiffs’ request to issue a preliminary injunction, which enjoined Fitial and co-defendants from “continuing, pursuing, and/or performing on the power purchase agreement.”

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