Despite a $2-million-plus grant from the Interior Department, the Commonwealth Utilities Corp. still needs at least $866,000 in contingency fund for the construction of a new oil pipeline.
U.S. District Court for the NMI designated judge David O. Carter ordered CUC last week to create that contingency fund no later than April 30, 2014.
“If the amount is raised through increased rates, then any balance remaining after project completion shall be rebated back to consumers,” Carter said after a status conference.
The CUC pipeline is an eight-inch aboveground receiving pipeline in Lower Base that delivers fuel from the Mobil oil facility to CUC power plants 1 and 2 in Lower Base.
Until the pipeline is properly repaired or replaced, the U.S. Environmental Protection Agency says it poses a threat to surrounding waters.
At the conference, the judge heard presentations from CUC’s pipeline engineer, David Vanderpool of Vanderpool Pipeline Engineers Inc., CUC’s pipeline construction contractor, Smithbridge Guam Inc., and from the U.S. government.
After considering the presentations and CUC’s written submittals, Carter underscored the importance for CUC to set aside a contingency funding based on the urgent need to move forward with the construction and commissioning phases of the project, and to ensure that these phases are completed without further delay.
Carter said the need for contingency funding is further supported by a finding that CUC, a non-for-profit governmental corporation, has been unable to accumulate reserves through its current rates and the collection of CNMI government receivables.
The judge ordered CUC to issue by Nov. 4, 2013, a notice to proceed to all three contractors, and by Nov. 30, 2013, to hold a pipeline construction contractor kickoff meeting and project review, and begin construction planning.
CUC was also directed by Jan. 6, 2014, to prepare and execute change orders; to begin pipeline construction by Feb. 28, 2014; and complete construction and commence pipeline testing and commissioning by July 3, 2014.
By July 17, 2014, the judge said, the pipeline shall be commissioned and by Aug. 30, 2014, CUC shall complete demolition of the old pipeline and project certification and close out.
EPA and CUC first agreed to complete the pipeline project by Feb. 24, 2011, then moved the deadline to June 1, 2011, then to March 15, 2012, and Jan. 25, 2013. CUC completed the design, but failed to build the pipeline by the extended deadline.