80-MW power project junked • CUC consultants say 60-MW enough to meet Saipan’s demand

Nearly three years after spending at least half-a-million dollars, the Commonwealth Utilities Corporation yesterday abandoned the initial plan on the Saipan power project, citing continuous economic difficulties that have sent the island’s electricity load growth falling.

In a decision met with angry protests, CUC’s Board of Directors voted to cancel the request for proposals for the 80-megawatt plant that was issued in 1997 to pave the way for another round of bidding — this time for a 60-MW generator recommended by its power consultants.

The decision invalidated the offers submitted by 13 companies, including Enron which emerged on top in the last round of evaluation conducted last year by Burns & McDonnell, the private engineering firm hired by CUC amid mounting protests on its earlier choice of Marubeni-Sithe.

Dozens of legislators, representatives of competing companies and others packed the CUC conference room at its office in Joeten Building in Dandan during the board meeting that sparked verbal insults directed to Chair Rosario M. Elameto and the rest of the members.

The unpopular decision yesterday capped nearly three years of efforts by the government-owned utility corporation to procure contract to build the $120 million project, touted to be the largest deal ever in CNMI’s history.

More than $500,000 have been spent by CUC for the project which was originally designed to meet anticipated power demand on Saipan by year 2000 — a situation altered by the economic crisis confronting the island for the past two years.

Downsize

Ms. Elameto and other board members refused to speak to reporters after the one and a half hour meeting, but issued two statements reiterating their commitment to push the project on a lesser scale.

“I want to protect the customer,” said the embattled chairperson in the statement. “We made our decision based on independent expert advise. We don’t want to incur more debt than we can afford because that would force the customer to pay higher rates.”

The board adopted the report conducted by Burns & McDonnell in the last three months assessing Saipan’s power load and CUC’s capability to handle the financial obligations associated with project of such magnitude.

The Kansas City-based engineering firm suggested two options for the board — either to scale down the 80-MW plant from the initial RFP or to plan for re-bidding of a new project with 60-MW capacity.

Because of uncertainties of the economy and the future of garment industry in the CNMI within the next few years, the report indicated that it would be best for CUC to choose the second option as it will save the utility corporation in terms of fuel costs.

“We believe this will save our customers millions of dollars,” explained Executive Director Timothy P. Villagomez. “If we had stayed with the original size, electric rates would have to go up when the plant opened.”

New bidding

Although it scrapped the three-year bidding on the project, the board maintained CUC will still push with the plan to provide the island a new power plant within the next few months.

It was not known when the new bidding will start, but Mr. Villagomez pointed out that the utility corporation is expected to award a contract for a smaller plant “within a few months.”

The project has drawn controversies since June 1998 when CUC awarded the contract to Japan’s Marubeni Corp. and its U.S. partner Sithe Energies, Inc. based on the recommendation by an in-house selection committee that included Mr. Villagomez and three other officials.

Mounting protests lodged by losing bidders forced the utility corporation to hire Burns & McDonnell as proposed by the Office of Public Auditor. The independent evaluation generally countered CUC’s findings as it ranked Enron, Tomen Consortium and HEI/SPP ahead of Marubeni-Sithe.

But the Commonwealth Development Authority, which has a stake at CUC due to the $100 million debt the latter owes, had urged the board to reconsider the initial plan in light of the economic situations.

The delay, however, prompted some members of the Legislature to increase its pressure on the utility corporation with threats to call oversight hearing, while CUC officials blamed top bidders for the confusion for their aggressive lobbying campaign.