Massive leaks at power plant

The Commonwealth Utilities Corp.’s fuel delivery system and tanks are deteriorating fast and need urgent attention or the government would face severe federal fines, according to a final report submitted by two consultants hired by the CNMI government to help upgrade CUC’s power plants.

In the same report, consultants Ramon “Kumoi” S. Guerrero and Roger Kitchingham warned that if CUC pursues its privatization program for Power Plant 1, the financially distressed agency would collapse.

In a seven-page report dated July 26, 2005, Guerrero and Kitchingham said that the overground pipeline from the dock to Power Plant 1 “is not in great condition” and, if not inspected in the next 18 months, “then serious deterioration will set in, causing more expensive and continuous repairs.”

A more serious concern, they said, is the 6-inch underground pipeline that had been abandoned, which is believed to still contain 18,000 to 20,000 gallons of diesel oil.

“The present content of this pipeline needs to be checked, if a leak has or will occur, and contamination of the shoreline could result in stiff fines and expensive cleanup,” they said.

Further, the report said that Tank 104 in Lower Base is in critical state of disrepair—the roof needs to be checked if it could withstand 150mph winds, and the stairs to the top are unsafe for personnel.

Its use as waste oil storage also puts the Commonwealth at risk, they said. “The tank should be emptied of the waste oil, heavy oil and 50,000 gallons of water,” said the two, adding that the tank should be refurbished and painted for fuel storage.

In a separate account, chemical engineer Richard Reddy, whose company had wanted to supply CUC with fuel, said that Tank 104 contains about 300,000 gallons of waste oil, which, he said, is way above the 275 gallon-limit storage of waste oil by the Division of Environmental Quality. Reddy had also said that the tank can be restored and used to store fuel or gasoline.

Guerrero and Kitchingham also said that Tanks 101 and 102 have exceeded their 10-year lifetime. They said these tanks were “temporary tanks” for military purposes.

“Longevity in excess of 10 years was not within the design scope; these tanks are now around 25 years old,” they said.

Other fuel and lubrication oil tanks also need professional inspection, they said, noting that there are indications that internal fuel transfer system has had overflows.

Further, Guerrero and Kitchingham said that other auxiliary systems to the rear of Power Plant 1 “need urgent repair.” They cited that reverse osmosis systems have protective covers that are either missing or not installed correctly.

“The R/O units have leaks and show signs of requiring overhaul. The raw water tank is near a stage of replacement, if correct action is not taken in the next few months,” they said.

As for the overall condition of Power Plant 1, the consultants said that eight engines are in serious condition except engines 6 and 7, “which do not appear to be in too much trouble.”

Corroded engines

They said that Engine 1, or Mitsubishi 1, has massive leaks, noting that its basement “and the other old plant engine has over $3,000 worth of product on the floor.”

“It needs all of the leaks stopped…the fuel inlet meter urgently needs replacement…the loss of money is minor compared with the major Saipan power generation system being gutted by fire,” they said.

They said that the engine’s fuel pumps and injectors need refurbishment as lack of it dramatically drives up fuel usage and daily costs.

On the annex roof, the muffler is not lagged or thermally insulated so that when exhaust heat is allowed to be radiated and is not totally directed out of the stack, the heat is drawn down to the radiators, causing power outages as generators 1, 5, and 6 trip offline.

They said Mitsubishi 1 gear pumps and air intake filters require replacement “with spare units that are readily available and are more cost effective.”

Mitsubishi engine 2 and 3 “need care and attention to leaks, breather filters, heads to manifold expansion joints, injectors, pumps, turbo charger refurbishment, fuel meter replacement, and radiator repairs.”

Mitsubishi engine 4, they said, had sustained a major failure and has a 90 percent chance of needing a crankshaft replacement. The engine eventually broke down on July 31 due to a damaged crankshaft.

Mitsubishi engine 5, they said, had a few foundation bolts replaced but concern is showing for foundation bolts around cylinder 11.

“Again the leaks on generators 5 to 8 are a problem, some cylinder have half 55 gallon drums to catch the leaks and the drums are emptied every shift. Problem occur consistently on exhaust bellows. Visual inspection leaves the feeling that this generation unit is in trouble,” they said, adding that the radiator needs cleaning—“not half-hearted occasional attempts with water hoses.”

“The radiator core supports are severely corroded and cooling fans are deteriorated,” they said.

As for Engines 6 and 7, with the exception of the foundation problems, these units do not appear to be in too much trouble, they said.

Engine 8, which is currently being fixed, has broken anchor bolts.

All engines, they said, need to have some heat resistant lagging blankets.

At Power Plant 2, engines 1, 4, and 5 have been rehabilitated using cannibalized parts. Its engine 6 was expected to be up two weeks ago, said Guerrero, with a new crankshaft and power packs being rebuilt.

Engine 2 and 3 can be restored but they require extensive parts. Guerrero said useful spare parts are almost depleted.

Power Plant 2 has a combined capacity of 15 megawatts while Power Plant 1 has a maximum capacity of 80 megawatts.

Currently, Power Plant 1 provides only 43 megawatts while Power Plant 2 contributes about 6 megawatts.

‘Privatization will lead to collapse’

Guerrero and Kitchingham also warned of the possible collapse of financially distressed CUC if it pursues its privatization program for Power Plant 1.

“If privatization is the path to be followed, the enormous fiscal demands will result in the collapse of CUC within two to three months,” said the consultants.

Guerrero said that if CUC chooses company A, which he earlier identified to be Telesource, it would be paying $1.2 million to the company a month and $700,000 a month for Company B, which is believed to be Rolls Royce.

“This is during the first three years,” Guerrero said.

He said these costs exclude fuel costs to be incurred by CUC. Under the proposed contract, CUC would provide the contractor with fuel. CUC has a two-year fuel supply contract with Mobil Oil Marianas.

In his recent presentation to the Legislature, Guerrero said that a more cost-effective option would be for CUC to loan the amount needed to repair the engines at a 4-percent interest rate, while self-generating the power it needs.

He said this option can happen if CUC’s debts with the Commonwealth Development Authority are written off or cancelled.

He said that CUC can also explore semi-privatization “where Power Plant 1 acts as quasi-[independent power producer] and CUC pays the going rate.” Under this setup, all repairs, parts, and labor are purchased using money from the payments.

CUC’s pending Request for Proposal for the privatization of Power Plant 1 calls for a 20-year agreement.

Guerrero said another option in running the power plant is Co-Op Utility, which is funded by local shareholders.