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CUC debt payment plan passes Legislature
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Posted on Nov 30 2006
The proposed legislation that would require a future independent power producer to repay half the debt owed by the Commonwealth Utilities Corp. to the Commonwealth Development Authority passed the Senate yesterday.
The Senate members voted unanimously to approve the conference committee’s version of Senate Bill 15-62, which initially sought to free any company taking over Saipan’s main power plant from the obligation to pay half of CUC’s $45.5-million debt to CDA.
The latest version would mandate the IPP to rebate back the $22.75 million to residential power customers, rather than require a repayment of the debt.
The rebate could be in the form of a fixed dollar amount discount or credit on a consumer account. It would be subject to review and approval by the Public Utilities Commission.
The bill authored by the Senate President Joseph Mendiola will now go to the Governor’s Office for action.
The original version of S.B. 15-62 proposed to amend the law that waived CUC’s debt to CDA. It sought to remove a provision that requires any company taking over the power plant to pay half the debt amount.
The House amended the bill. It retained the repayment requirement and proposed that the money be used for several government programs and projects. The Senate rejected the House amendment and a conference committee made up of Senate and House members was formed.
The committee maintained that the repayment may discourage companies from bidding on the planned privatization of CUC’s power division. In addition, the debt service requirement would be added to the cost of producing power and may be passed to consumers, thereby increasing the electric rates for consumers.
“[Thus].it is not in the best interest of CUC or the people of the Commonwealth to require an independent power producer to pay fifty percent of the $45,500,000 to the [CDA] or for other government projects. The repercussion of the debt service repayment greatly outweighs any benefit of the repayment,” the committee said. [I][B](Agnes E. Donato)[/B][/I]
