Rep. Heinz S. Hofschneider, R-Saipan, and Rep. Victor B. Hocog, Ind.-Rota, sponsored the vetoed House Bill 16-77.
Under the bill, the private firm that will operate CUC’s power generation will pay a total of $250 million in cash or in a combination of cash and equivalent infrastructure improvements to the agency within a 40-year period.
In his veto message, the governor said while he commends the Legislature’s resolve to address the power crisis in the CNMI, the legislation as passed “presents many deficiencies.”
He said the affordable rates offered in the bill are not realistic.
“What may be affordable for one customer may not be the same for others. CUC, even at a time when utility rates were at its lowest levels, still had customers who were disconnected or needed promissory notes to address their respective accounts,” he said.
“Realistically, the best that could be expected of CUC is to provide reliable services at the least amount of cost. In that CUC is successful in attaining least cost in the provision of reliable services, we are all hopeful that for all customers the rates will then be affordable and within their respective financial means,” he added.
Based on his lawyers’ analysis, Fitial said certain sections of the bill will actually increase CUC’s costs of operations or will impact the rate.
Furthermore, Fitial said a section requiring any contractor to operate the plant to have five years experience in emission compliance in accordance with U.S. Environmental Protection Agency regulations may preclude international companies having experience with power plant operations and capable of compliance from participating in the bid process.
A section requiring CUC to bear costs of the review of its actions in any protest, rate case, among other things, will impact the overall operation of the corporation, said Fitial.
“Budgeting for a variable and unpredictable cost such as this will impact the rate further,” he said.
He added that the section protecting CUC employees’ rights are “overly broad” which may force the winning privatization bidder to hire them despite their unsatisfactory performance.
The section dealing with pooling of renewable energy customer does not also please the governor.
He said this will also affect CUC’s revenues and impact its overall operations.
Senate President Pete P. Reyes, R-Saipan, earlier told Variety that he would support an override of the governor’s veto.
