Legislature not getting clear answers from CUC

By Timothy P. Villagomez

There has been much discussion from the administration and CUC board of directors pushing for privatization of the power plant. The board has been pursuing this agenda for about two years now while the administration began looking into the matter shortly after taking office. The governor even had CUC entertain a U.S. company interested in setting up a large power barge in the lagoon. Their plan was to have this power barge generate power and capture emitted heat to produce water.

I am sharing this information with the public so that you may have a better understanding of why the House Public Utilities, Transportation and Communication Committee has bombarded the CUC board of directors and executive director with questions. I feel it is important to inform the public that the PUTC Committee has made numerous inquiries of the board and executive director and received very few answers to the questions. The famous response from CUC is “We are not prepared to answer your question at this time, we will research the issue and provide you answers within a week.”

We at the Legislature are having difficulty trying to obtain a clear answer from CUC. The chairman of the board recently said that he is frustrated with the Legislature because they keep bombarding him with questions. The real problem is that the chairman, other board members and executive director are unable to respond to our questions. This is unacceptable as these are the people entrusted to manage our utility infrastructure. We ask questions about issues and actions the board members and executive director have discussed during their board meetings. These board members take action on critical issues, yet they cannot respond to simple inquires to action they have already taken during their meetings.

I, as chairman of the PUTC, feel it is important to keep the public informed of the frustration we experience trying to understand the action of the board of directors. I will outline a few examples of poor decisions by the board of directors that directly contribute to our CUC crisis.

* The board of directors decided about a year ago to stop buying spare and replacement parts for the power plant due to their plans to privatize CUC power plant operations. Result: The power plant is operating inefficiently and uses substantially more fuel and lubricants to produce power than normal if regular parts and repairs were to proceed as required.

* The board of directors waited until they depleted their funds prior to implementing the fuel surcharge. Result: All of CUC operations are affected as a result of their negligence. Water, wastewater, power, generation and even customer services must all try and get parts, tools, computers, vehicle repairs and other necessities to sustain operations with minimal supplies. We all see the results of the board’s decisions. Regular power outages, sewage overflowing and water shortages are shared by all of us.

* The board of directors could not decide on their office location. They have known for months their lease was expiring at the end of May, yet their inability to take appropriate action has forced CUC to move up to La Fiesta. Result: The staff of CUC does not know where they stand in any of this mass confusion. No one is giving clear direction to the staff and they are told just start moving everything to La Fiesta. When they proceeded to La Fiesta, they were initially informed of the number of rooms available to them a few weeks ago; this has all changed, as now CUC will be limited to selected office space that requires the most renovation work. Who is going to pay for all the renovations? CUC cannot even pay for its fuel, much less renovate La Fiesta.

I could provide much more information; however, many issues are very technical and the PUTC committee is still waiting for many answers from CUC. There is no doubt in my mind that this board of directors is incapable of answering the questions presented to them. It is difficult for me, as the former executive director, to understand how CUC could have fallen apart so quickly. The board and executive director have neglected their responsibility to protect the financial integrity of the corporation to ensure services are uninterrupted. The people have every right to know why CUC is falling apart and why the Babauta administration waited for the crisis to develop to this point before taking action.

The board of directors would like all of us to believe that the recent power outages and fuel crises were beyond their control. The truth is the board had full control and ability to recover costs, yet they decided to lead CUC down a path of destruction. The action or inaction of the board indicates their desire to have a private contractor take over power plant operations no matter what the cost. They will just pass these costs on to the consumers anyway. The board of directors wasted a full year arguing over the fuel surcharge while the rest of the world raised utility rates to coincide with rising fuel costs. The CUC board decided against such action even while their own comptroller warned them numerous times that CUC would run out of funds shortly if they took no action. Now, CUC owes Mobil almost $9 million. The power plant is operating inefficiently due to the lack of spare parts, requiring CUC to incur higher fuel and lubricant consumption to produce the same power output.

Right now CUC is holding back on some payments to vendors in order to meet its fuel obligation and payroll. Soon vendors will follow Mobil’s lead and require CUC to make payments prior to delivery of goods. This will affect all of CUC’s operations and have an impact on the economy and, more importantly, CUC’s ability to provide basic services to the people of the CNMI.

The state of emergency only impacts CUC; however, the cancellation of JAL flights may require the governor to follow suit on CPA to keep the ports open and operating for the best interests of the CNMI. You can expect the governor to declare that the economy is “still pretty darn good.”

(Rep. Timothy Villagomez is the House vice speaker and chair of the House Public Utilities, Transportation and Communication Committee. He is also a former CUC executive director.)