Omnibus agreement provides $7.2M offsetting payment, CPA to get free water
The Commonwealth Ports Authority board approved yesterday an omnibus settlement agreement between CPA and the Commonwealth Utilities Corp. to resolve longstanding disputes relating to utilities and water charges, as well as easement and access/right to use.
The agreement went through on six yes votes, according to CPA board chair Kimberlyn King-Hinds during the meeting.
Aside from King-Hinds, the other board members who gave conditional approval to the CUC-CPA omnibus agreement were Roman Tudela Sr., Pete P. Reyes, Barrie C. Toves, Joseph Diaz, and Ramon A. Tebuteb.
CPA has been working with CUC for four years now to resolve their disputes through a settlement agreement.
The agreement gives CUC permanent easement for use and access to 67 water wells on CPA premises on Saipan; the existing CUC water line transporting the water from the well to the CUC island system; CPA’s 20-million gallon water tank; and the CUC sand filtration system on CPA premises.
In highlighting some of the terms of the agreement, King-Hinds said the deal also gives CUC the responsibility to maintain the water wells easement. King-Hinds said this will give CPA a continuous water supply from the water resources on its premises—for free. CPA, however, will pay for sewer line charges at an established flat rate.
King-Hinds said this agreement will resolve the specific charges that have been an ongoing dispute between CUC and CPA.
“This agreement basically would provide an offset of charges,” said King-Hinds, noting that CPA will pay CUC $7.2 million as a settlement amount for the disputed water charges and penalty.
“This same amount shall be the amount of consideration for the easement agreement that we will be executing with CUC,” she said.
King-Hinds said the issue with CUC’s Saipan seaport wharfage fee is fully resolved.
She said CPA will pay CUC the monthly fees for the sewer charges at the estimate amount of 47,000 gallons per day until the installation of an altitude valve by CPA no later than six months, after which the sewer charges shall be based on correct meter readings. King-Hinds said they should be expecting that a meter will be installed.
“This agreement would basically give CPA free water,” she said.
They still have accounting issues that they need to address, King-Hinds said
“Because we are signing this agreement today, we want to go back to CUC and say, ‘Listen, this back-billing needs to be reflected in previous years and not these fiscal years since the back billing are for those years,’” she said.
She expects CPA executive director Christopher S. Tenorio to give these accounting issues the highest priority as the approval of the omnibus agreement will be conditioned upon that being resolved.
King-Hinds said that, although she is a lawyer by trade, she does not like getting into the business of litigation, especially between two government agencies.
“I kind of believe in the one government, one Commonwealth approach,” said King-Hinds, explaining that whatever CUC absorbs eventually ends up costing utility consumers.
She believes the agreement is a fair deal for both parties.
“I know that we want to be territorial in terms of our property and in our water and all of that but I think that this is a win-win for both CPA and CUC,” King-Hinds said.
More importantly, she pointed out, the impact on the average citizen—who usually end up having to shoulder some of the costs—is relieved.
“So, I think it’s a great deal,” she said.
In a separate interview, King-Hinds said CPA obviously owes CUC, which is the issue with their billing, so this agreement basically settles that dispute with regards to CPA’s water charges.
She said in exchange for the settlement, they are giving CUC access to the 67 water wells that they have been using over the course of many years.
King-Hinds said with the CPA board’s approval, the agreement will go to CUC board for final approval.
She said the Commonwealth Public Utilities Commission is also required to approve it.
“So it’s a conditional approval,” the chairwoman added.
CUC last reported that CPA’s debt to CUC now stands at $17.7 million.
CUC executive director Gary P. Camacho recently informed the CUC board that a draft of a memorandum of understanding was delivered to CPA for review and approval to settle CPA’s debt with CUC.