By Bryan Manabat
[email protected]
Variety News Staff
THE Superior Court has rejected AP Energy LLC’s attempt to pause the Commonwealth Utilities Corporation’s evaluation of proposals for a major solar-and-battery project, ruling that the company was properly disqualified for failing to submit mandatory audited financial statements.
Associate Judge Lillian Ada Tenorio denied AP Energy’s motion for a stay and temporary restraining order on March 16, concluding that the company was unlikely to prevail in its challenge and that delaying the procurement would jeopardize CUC’s ability to secure federal tax credits tied to the project.
The dispute centers on CUC-RFP-25-021, issued Aug. 26, 2025, which seeks an independent power producer to build solar photovoltaic systems with battery energy storage across all islands. The selected proponent will enter a 25-year, multimillion-dollar contract to construct solar installations, storage systems and grid improvements.
The RFP required audited financial statements
The court emphasized that the RFP’s scope of work and appendices repeatedly and explicitly required proponents to submit audited financial statements for the past three years.
Subsection 3.2 of the scope of work states that “audited financial statements…are…required,” and Table 3.2 lists “audited financial statements for the last three years” as documents that “must be submitted with other proposal materials.” Appendix A’s proposal checklist likewise requires “audited financial statements, last three years.”
Section 8.3 of the RFP reinforces the requirement, stating that proponents must demonstrate their “ability to fund/finance their obligations” and that Appendix B “outlines the required submittal of documents such as audited financial statements.”
AP Energy, however, submitted documents labeled “Unaudited Financial Statements — Reviewed Annual Report” for itself and its affiliates. Only one partner, HYC Corporation, provided audited statements.
AP Energy argued that Appendix B created an alternative option because Item 6 requires “copies of the most recent three years of audited financial statements or annual report.” But the court rejected that interpretation as a “selective reading” that ignored the rest of the RFP.
“Reading Appendix B to allow proponents to submit unaudited reports in lieu of audited statements would fail to give effect to the four other provisions in the RFP that explicitly require the latter,” Judge Tenorio wrote.
CUC’s clarification was binding
Before the proposal deadline, AP Energy submitted a request for information asking whether alternative financial documentation could substitute for audited statements. CUC responded:
“The requirement for audited financial statements is mandatory and non-negotiable.”
The court held that this written, signed and publicly posted clarification “was binding on all proponents,” citing federal procurement precedent.
Irreparable harm not shown
AP Energy said it would suffer irreparable harm through loss of competitive opportunity, potential profits and project experience. The court disagreed, finding the alleged harms speculative and noting that AP energy was disqualified “based on objective criteria.”
Hardships and public interest favor CUC
Judge Tenorio found that granting a stay would threaten CUC’s ability to select a proponent before a July 4, 2026, federal tax credit deadline. Missing the deadline could increase project costs.
She added that allowing unaudited financials would undermine CUC’s ability to evaluate whether developers “demonstrate the financial viability of their project and their creditworthiness” for a long-term power contract.
“The public interest favors timely pursuit of federal tax credits and a utilities agency that prioritizes proponents with independently verified financial solvency,” the court wrote.
Alternate tests also unmet
Even under the Ninth Circuit’s “sliding scale” or the alternative standards in Anaks Ocean View Hill Homeowners Association v. Inos, AP Energy failed to show either probable success or a balance of hardships tipping in its favor, Judge Tenorio said.
“For the foregoing reasons, the petitioner’s motion is hereby denied,” she added.
A status conference is set for April 8 at 9 a.m. in Courtroom 223A.
Bryan Manabat was a liberal arts student of Northern Marianas College where he also studied criminal justice. He is the recipient of the NMI Humanities Award as an Outstanding Teacher (Non-Classroom) in 2013, and has worked for the CNMI Motheread/Fatheread Literacy Program as lead facilitator.
