CUC defies AGO opinion • Board chair says utility corporation will proceed with awarding

Saying the long-delayed Saipan power project has to move on, Commonwealth Utilities Corp. Board Chair Jesus T. Guerrero yesterday downplayed a legal opinion issued by the Attorney General’s Office in which it strongly urged the board to withhold awarding of the multi-million dollar contract.

It was just a very short memorandum drafted by longtime CUC legal counsel, Bill Ohle, for Attorney General Herb D. Soll in response to an inquiry whether the board can extend the deadline imposed by a recently enacted law to make the award, according to a statement released by his office.

“We met at great length with representatives of the [AGO],” Mr. Guerrero was quoted as saying. “We listened to their views, and we appreciate that they were willing to sit down with us.”

He maintained the board considered the AGO’s views, along with the provisions of Public Law 12-1 that set out procurement of the 80-megawatt power plant as well as other reports prepared for the project.

“In the end, it was the majority opinion of the board that the right thing to do for the community after many years on this project is to move ahead,” he said.

“We already have the technical reports, and soon we will have the full complement of experts to handle this project,” added the chairman.

Mr. Guerrero’s statement came amid concerns that the board’s decision last Friday granting “conditional” award of the estimated $120 million project to Texas-based conglomerate Enron had ignored the AGO’s recommendation.

Based on the legal opinion, the government-owned utility corporation can extend the 60-day limit imposed by PL 12-1 if there is “clear and convincing evidence” that it is not in the best interest to hand out the contract within that period.

It stressed that the board was not prepared to make the award in the absence of technical specifications, contract documents and experts to help them reach a decision.

“Under the present circumstances, there appears that a clear and convincing finding can be made that it is in the best interest of the utility to delay an award until the specifications, contract documents and revised proposals have been compiled, submitted and evaluated,” said the AGO.

Memo to the board

The memo was given to the board last Friday before its meeting began where members voted 3-2 to award the contract to Enron over close competitors the consortium of Tomen, Alsons, Singapore Power and Tan Holdings as well as Saipan Power Partners/Hawaiian Electric Inc.

But Mr. Soll and Mr. Guerrero had met two days before that meeting to discuss the possibility of extending the review process. The board has had no permanent legal counsel since Mr. Ohle’s resignation last March.

CUC will soon hire through a sole-source contract a private legal counsel who will help the board negotiate the terms of agreement on the project before making a final award to Enron.

A variety of legal, technical details are to be worked out in the course of routine contract negotiations, according to the statement. Mr. Guerrero likewise said the negotiation phase will use “extensive technical materials that have been developed during the lengthy procurement process.”

House Floor Leader Oscar M. Babauta earlier has expressed concern that the board might not have been given ample legal guidance in making that decision as he cited the AGO’s recommendation.

Since the board voted to award the contract, he said there is nothing that the Legislature can do to prevent potential lawsuits. “We will just let the situation handle itself. We will see what will happen if the issue comes to court,” he said Tuesday.

Both the Tomen Consortium and SPP/HEI have said they will seriously consider legal protests to block final award to Enron, alleging that the board did not comply with recommendations by its power consultants from Burns & McDonnell.

CUC has come under fire since 1998 over its handling of the power project touted to be the biggest deal ever in CNMI’s history. It is to be installed through the build-operate-transfer scheme under a 25-year agreement.