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‘Junk $250M price tag for CUC privatization’
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Posted on Dec 22 2008
Rep. Heinz S. Hofschneider has sought the removal of a provision in the Commonwealth Utilities Corp. privatization law that requires the successful bidder to pay $250 million.
Hofschneider’s House Bill 16-204 also defines what entities will qualify as a “U.S. certified contractor” for purposes of assisting CUC in the bidding process and to further clarify which entities may qualify to participate in CUC Private Sector Assistance Agreements.
Hofschneider noted in his bill that it is necessary to amend Public Law 16-17, called the CUC Private Sector Partnership Act of 2008, “to provide greater clarity and to create a greater probability of obtaining reliable power at a reasonable rate for the people of the Commonwealth.”
The lawmaker said the impact of requiring a successful bidder to purchase 100 percent of CUC’s assets and operations for power generation and paying $250 million would likely result in more expensive power for the CNMI.
He said this provision in the law should be modified “in such a manner that preserves the Commonwealth’s interest in shifting from fossil fuels to alternative energy sources.”
Under a new provision proposed in the legislation, a contract for an independent power producer may be awarded for a term not to exceed 25 years, provided that any IPP contract for more than 10 years shall include a condition that the IPP shall comply with the renewable energy requirements of the privatization law.
“An IPP may contract for the use of fossil fuel only in electric power generation for no more than 10 years and CUC retains the right, at any time prior to expiration of such contract, to buy out the remainder of the contract at fair market value if a reasonable source of alternative energy becomes available to the Commonwealth,” according to the bill.
The privatization law was enacted after the Legislature overrode Gov. Benigno Fitial’s veto on the bill.
