Power project put on chill

The Office of the Public Auditor has deferred action on pending protests lodged against the Commonwealth Utilities Corporation over the stalled power plant on Saipan following a decision to hire an independent engineering firm to re-evaluate various project proposals.

But companies locked in a legal dispute with CUC have slammed what they claimed as unclear status of an agreement earlier forged with Marubeni Corp. of Japan and its U.S. partner, Sithe Energies, Inc. which has been the subject of the protests since last June.

Lawyers for both Enron and a consortium of Alsons, Tomen, Singapore Power and Tan Holdings Corp. raised doubts that the deal has been called off in light of the new round of review to be conducted on the project in the next few weeks.

In separate letters to Public Auditor Leo L. LaMotte, the two close competitors to the new power plant said CUC has yet to rescind the $120 million accord despite its announcement last September to seek an independent evaluator on all offers submitted by 13 companies.

The utility firm has no definite plan mapped out after the engineering firm is selected to undertake the re-evaluation task, according to their letters responding to the latest OPA decision.

LaMotte maintained the suspension was made based on an assumption that a new selection process will be conducted anew by the forthcoming independent panel to determine the winning bidder.

“Since it appears that a new evaluation of proposals and selection will be undertaken, it is quite possible that the results of the re-evaluation and selection will render moot some or all of the old issues,” he told in a letter to Enron and the consortium.

“To avoid deciding issues which may well be rendered moot, we are suspending our consideration of your two appeals without prejudice to your right to re-file them at a later time,” the OPA chief added.

LaMotte’s action came on the heels of mounting opposition against the choice of Marubeni-Sithe as potential contractor of the Saipan power plant over allegations of incompetence and bias of an in-house selection committee.

CUC, through its private legal counsel, argued the protests are now without basis after it has agreed to hold a new review and accepted the voluntary recusal of former members of the initial evaluation committee that included Executive Director Timothy P. Villagomez and Assistant Attorney General William J. Ohle.

They have also “canceled its decision to enter into contract negotiations with Marubeni-Sithe,” according to statement submitted to OPA.

“In other words, CUC, acting in good faith, has already set in motion corrective measures designed to address and remedy all grievances, real and imagined,” said its lawyer Lecia M. Eason.

But Bruce L. Mailman, Enron’s counsel, questioned Eason’s claim of the cancellation of the deal with Marubeni-Sithe in the absence of a confirmation from utility officials.

In his letter to LaMotte, Mailman pointed out that there has been no announcement of the decision to clear doubts on the status of the deal. He added that while the Houston-based company has agreed to hold off its next step, it is still pursuing its protest.

The consortium, meanwhile, seemed pessimistic over the re-evaluation of the proposals since it will cover only the redetermination of the competitive range as required by OPA.

“Any further evaluation or selection proceedings beyond that are contemplated solely ‘at the option of CUC,’ and CUC has given no indication that it has exercised or will exercise that option,” its lawyer Robert J. O’Connor told LaMotte.

He also urged the public auditor to hasten decision on the consortium’s pending protest “for all our sakes.”

Touted to be the largest deal ever in the CNMI, the Saipan power project — designed to meet anticipated shortfall on the island by the end of the decade — has been pushed back to a later date on the heels of the protests.