JNB extends emergency power

Saying that the power crisis remains unresolved, Gov. Juan N. Babauta extended yesterday for another 30 days his emergency powers over the Commonwealth Utilities Corp.

“Emergency measures must remain in place in order to ensure the safety of the people of the CNMI,” said Babauta.

Other reasons he cited that required the extension of the emergency declaration include:

* The threat or danger to the CNMI caused by the lack of “back-up” power or reserve power generation capacity;

* The “continued need” to initiate critical maintenance and repair of power generation facilities; and

* The uncertain financial condition of CUC and its ability to make all required fuel payments, “especially given the proposed repeal of the ability of CUC to impose a fuel surcharge.”

Babauta held a three-hour meeting—from 1:30 to 4:30pm—with CUC and several other officials to “primarily discuss power privatization.”

Press secretary Peter A. Callaghan said CUC power privatization consultant, Harris Group, made a presentation during the meeting.

He said the governor inquired “whether [the proposed power plants] privatization is feasible and, if it’s feasible, what are the best options of the two bidders.”

He said the governor received an assurance from both Harris Group and CUC that there will be no power rate increase within three years of the privatization. At the end of this period, though, power rate would be adjusted by 2 cents per kilowatt-hour.

Present in yesterday’s meeting were CUC officials led by executive director Lorraine A. Babauta, Harris Group executive Dennis Swann; members from the Legislature: Senate President Joaquin G. Adriano, Reps. Joseph Deleon Guerrero and Benjamin Seman, and House minority leader Arnold I. Palacios; Attorney General Pam Brown, and some staff of the governor.

“It seems like privatization is the only viable option at this point because, if CUC were to attempt the needed maintenance of Power Plant I as well as purchase new engines which the RFP calls for, they [CUC] would need $60 million in the next month or two to get them started. Whether or not they could borrow that kind of money at an interest that is viable is in doubt,” said Callaghan.

He said both parties also reached an agreement to remove the “full-faith backing” clause in the draft agreement with the proposer. This means the government would not be compelled to extend guarantee for either of the two proposers applying for a loan.

Meantime, Babauta said that the emergency declaration is needed to continue to initiate critical maintenance and repair of power generation facilities and amid the “uncertain financial condition of CUC…especially given the proposed repeal of the ability of CUC to impose a fuel surcharge.”

The Legislature recently passed a bill that aims to repeal the fuel surcharge provision. The measure is now pending at the Governor’s Office. The governor said earlier that he would act on the bill on or before July 29.

Babauta declared the state of disaster emergency on May 19 due to recurring power outages on island. On June 19, the governor issued a memorandum extending the declaration for another 30 days, or until today. In his memorandum, Babauta said he would inform the Legislature prior to the end of the 30 days about the lifting or further extension of the declaration.

He said a comprehensive report on the exercise of the emergency authority during the first 60 days shall be submitted to the Legislature within the next 10 days.