CUC readies Enron deal • Utility firm earmarks $.5 million to tap lawyers and consultants for final negotiations

The Commonwealth Utilities Corporation earmarked over half-a-million dollars to retain a battery of lawyers and power consultants in preparation for negotiations with Enron on the much-delayed power project on Saipan.

In a special meeting yesterday, the CUC board approved the hiring of lawyers from Hong Kong-based Fulbright and Jaworski to assist the government-owned utility corporation in closing a deal with the Texas-based conglomerate on the 60-megawatt power plant.

It has also contracted the services of a local law firm of Brien Sers Nicolas, Robert T. Torres and Antonio S. Cabrera as legal counsels to the corporation following the resignation of its long-time counsel, former Assistant Attorney General Bill Ohle, last June.

Senate legal counsel Steve C. Woodruff has also been hired as liaison and local counsel with Fulbright & Jaworski to work closely on the power project.

The board did not provide details on how much each of these lawyers will be paid, but it approved a budget of $500,000 alone for the costs of retaining their legal expertise.

CUC also expects to shell out additional $20,000 to extend the services of power consultants from Burns & McDonnell, the Kansas City-based engineering firm that it hired in January 1999 to conduct independent evaluation on bids submitted for the power project.

With the infusion of these fresh funds, the controversial project has now cost the government over a million dollars through three years of planning, bidding and negotiations, based on documents detailing CUC’s expenditures.

Initial estimate

Board Chair Jesus T. Guerrero said the estimated budget of over half-a-million dollars is just the “initial expenses” CUC anticipates to spend in trying to reach a final agreement with Enron.

“I can’t give you the accurate information as far as the amount [is concerned]. As [the negotiations] progress, the [expenses] will be accumulating,” he told reporters after the brief meeting held at CUC’s corporate office in Dandan.

The board hopes to begin “preliminary” discussion on a deal between their attorneys from Fulbright & Jaworski and Enron’s lawyers by mid-August, with the full negotiations slated around September 11, according to Mr. Guerrero.

The board also wants to finalize the process by November, while the signing of the contract on the estimated $120 million plant with Enron is being eyed before the end of the year, he said.

Despite protests lodged by the consortium of Tomen, Alsons, Singapore Power and Tan Holdings as well as Saipan Power Partners/Hawaiian Electric Inc. against the board’s choice of project contractor, Mr. Guerrero stressed these will not derail their efforts to conclude the three-year bidding by this year.

“Regardless of the protests, we will initiate the negotiations. The protests is only one side [of the matter],” he explained. “Somebody has to start now.”

The chairman also expressed confidence that the negotiations will run smoothly as he noted that CUC will respond to the protests opposing its decision on the project later this month.

No legal snags

“I don’t foresee any legal problems. If the protests want to continue through the legal process, by all means [we welcome them]. What can we do, [other than] to entertain them,” added Mr. Guerrero.

The power project has come under a storm of protests since June 1998 following several missteps, including initial decision to award the lucrative contract to Marubeni-Sithe and the move to cut down the size of the plant from 80 MW to 60 MW.

Lawmakers intervened early this year to force CUC to reinstate the original plan, putting in place flexibility by phasing in a smaller plant as recommended by Burns & McDonnell.

Although the decision to award a new contract to Enron was split, utility officials had been pushing for a final deal to close this three-year saga that sparked host of controversies since 1997.

Discussions with Enron are expected to focus on the terms of the contract, including price — a process that the board has said will require legal expertise as well as technical advice from its independent power consultants.

Fulbright & Jaworski and Mr. Woodruff will be on board until the negotiations are completed, while the local lawyers’ contract will be renewed every year, said Mr. Guerrero.

The Attorney General’s Office, which had offered to continue providing legal services to the government corporation, will be on call as may be “requested” by the board.

The extension of Burns & McDonnell, which CUC has paid $150,000 for the first two initial services, will involve scope of work drawing up specifications of the 60-MW plant, said Executive Director Timothy P. Villagomez.

“I have contacted [them] and I have requested their presence here to have a face -to -face contract negotiations with the board,” he said in a separate interview, adding that the $20,000 fee will cover work that will take about two weeks.