Speaker Arnold I. Palacios, R-Saipan, said the CUC Private Sector Partnership Act of 2008 is a “serious attempt to inject a reasonable, rational framework for handling the government’s chronic procurement problems involving its power utilities.”
Rep. Heinz S. Hofschneider, R-Saipan and a co-sponsor of the measure, said the $250 million “price tag” mentioned in the new law is not a requirement for a one-time cash payment.
“The $250 million can be an in-kind contribution through the construction or installation of new infrastructure — an underground cable, for example — or it can be paid in installments over 40 years,” he said. “It will not hurt the winning bidder.”
Palacios noted that the three previous CUC privatization efforts failed “because of serious problems associated with bad procurement.”
According to Hofschneider, the new law is “a departure from past practices.”
“It will require the CNMI to explore alternative energy sources, which makes a lot of sense due to our recent experience with soaring fuel prices,” he said. “And it will also require the company willing to manage, operate or purchase the power utilities to make modest investments to improve services for a period of 40 years.”
He and the speaker said they acknowledge the concerns of those who are opposed to the privatization measure.
“But if they examine the details of this legislation, they will find that they share its objectives,” Palacios said. “Their concerns and the Legislature’s concerns are not far apart.”
Nothing in the new law, he added, prevents the CNMI from requesting the federal government to help solve the island’s power problems.
“In passing this bill, lawmakers wanted to see reasonable and affordable power rates,” Palacios said.
It is still the task of the Public Utilities Commission to monitor CUC’s rates, he added.
Gov. Benigno R. Fitial earlier vetoed the bill, H.B. 16-77, which he described as having “many deficiencies…that will increase CUC’s costs of operations or…impact the rate.”
The Saipan Chamber of Commerce said the “purchase price attached to CUC’s electric power generation operations will ultimately be passed on to utility consumers by the purchasing company….”
The Senate voted 8 to 1 to override the governor’s veto on Sept. 25. The House, by a 15 to 3 vote, followed suit on Wednesday.
