House panel revisits CUC privatization plan anew

The House Committee on Public Utilities, Transportation and Communication is once again focusing on the privatization of the Commonwealth Utilities Corp.

In December, Rep. Heinz S. Hofschneider introduced a bill that would amend parts of Public Law 16-17. That law set the price tag of the utility agency at $250 million. Hofschneider’s House Bill 16-204 removes the price tag and clarifies what defines a “U.S. certified contractor.”

House Speaker Arnold Palacios on Friday said it’s important that competent consultants are hired to help with the privatization effort.

“We believe we need to begin to set standards for some of these consultants we have to hire,” he said, “so we know they’re well qualified. Since we are a U.S. jurisdiction it makes sense to make sure it is U.S. qualified.”

If it an international company is hired, it is important they are a reputable company, he added.

The price tag is something else that is being discussed, Palacios said. One of the reasons Gov. Benigno Fitial vetoed the privatization bill (which was subsequently passed into law when the Legislature overrode the veto), saying the $250 million price tag would lead to higher utility rates. Any company that ends up buying CUC, he said, would try to recover the $250 million and other purchase costs by passing them on to utility consumers.

Hofschneider’s HB 16-204 will remove that price tag.

“Regardless of a $2 price tag, or $250 million, or half a million, we’re going to say what was the market appraisal on a fair market value of the franchise. The exclusively part of power generation in the Commonwealth,” Palacios said.

Being the one and only power producer in the Commonwealth is valuable, the speaker said.

Although, at this point in time, he said the exclusivity factor may not increase the value.

“Maybe at this point in time it might not increase it because the customer base has gone down,” he said. “But still, if you look at value over a 25 year period — to be the only one to authorize power to all consumers in the Commonwealth. What is the value of say 30 years or 40 years? From there then we can talk about power rates.”

He said the time span would help determine the price structure because the company will want to get a return on their investment.

The price tag, he added, was too specific.

“It could go either way. If it were more valuable, the Commonwealth would have lost out. If it was less, possibly investors will not be interested. Those are the issues we need to clarify.”

They are also looking at clarifying some of the alternative energy mandates in the law.

“We had discussion which clarified it and pointed out some provisions to make it unambiguous,” Palacios added.