Because the Senate earlier overrode the veto, House Bill 16-77, or the CUC Private Sector Partnership Act of 2008, is now law.
Only three voted against the override — Reps. Tina Sablan, Ind.-Saipan; Edward T. Salas, R-Saipan; and Francisco S. Dela Cruz, Covenant-Saipan.
House Minority Leader Oscar M. Babauta, Covenant-Saipan, abstained. Rep. Ray N. Yumul, R-Saipan, remains on official leave after the U.S. military called him to active duty.
The new law will open up CUC’s power generation service to the private sector through a competitive bidding process.
“The Commonwealth Utilities Corp. shall not enter into any form of performance management contract, franchise agreement or private sector assistance unless the agreement is awarded pursuant to an invitation to bid. No such contract shall be awarded pursuant to a request for proposals,” the new law states.
It mandates CUC to hire the services of a U.S.-certified contractor to evaluate the bids.
The new law also supersedes all prior statutes about CUC, including an executive order that stripped it of its autonomy.
This means that the governor must appoint eight members for the CUC board — one each for Rota and Tinian, two women and five more with experience in the business community.
Each board member must be confirmed by the Senate and will serve a term of four years.
Within 90 days from yesterday or upon getting a board quorum, CUC must “establish rates, meter, bill and collect fees in a fair and rational manner from all consumers of utility services it has not privatized so that the corporation will be financially independent of all appropriations by the Commonwealth Legislature by Oct. 1, 2009 or as soon as possible thereafter.”
It also contains a provision allowing residential customers to finance their outstanding accounts for up to one year without limitations on refinancing.
In his veto message to the Legislature, the governor expressed concerns on at least nine sections of H.B. 16-77, which Rep. Heinz S. Hofschneider, R-Saipan, and Rep. Victor B. Hocog, Ind.-Rota, sponsored.
“While I commend the Legislature for its continued efforts to resolve the power crisis of the commonwealth, legislation as passed presents many deficiencies…. [Some] sections within the legislation will increase CUC’s costs of operations or will impact the rate such that those who could afford CUC utility rates will continue to decrease relative to CUC’s current customer base,” the governor said.
Necessary changes
Hocog, the chairman of the House Public, Utilities, Transportation and Communications Committee, said the time has come for lawmakers to do something to address the power crisis in Saipan, the center of business activities in the CNMI.
“This is the time and the day and the beginning of a new life for everybody,” he said during the deliberations on the motion to override the veto.
According to Hofschneider, the $250 million price tag will be amortized within four decades so it won’t hurt the pockets of the private entity that will take over the power plants.
“The $250 million, if you amortize that in 40 years, that’s not much. There’s no free lunch on earth,” said Hofschneider.
But Sablan said lawmakers should look at the far reaching consequences of their action.
She said U.S. Office of Insular Affairs Director Nik Pula noted that the CNMI lacks credibility in addressing pressing issues like the power crisis.
She warned lawmakers that the override will send “mixed signals” to Pula whose office is offering the CNMI grants to explore alternative solutions to the islands’ power problems.
Dela Cruz said: “We’re going to be sending a message to the [Office of the Insular Affairs] that we don’t need their millions of dollars anymore.”
But House Floor Leader Joseph N. Camacho, R-Saipan, argued that even if the Legislature comes with a revised CUC privatization bill, there is no guarantee that the governor will sign it.
“What’s to prevent the governor, for whatever reason, or no reason at all, to veto this bill? We struggle everyday in the Legislature with imperfect solutions,” he said.
In a written statement to the Legislature, the Saipan Chamber of Commerce said while it is generally in favor of the privatization project, their members are concerned that the privatization bill would increase utility rates.
“Any purchase price attached to CUC’s electric power generation operations will ultimately be passed on to utility consumers by the purchasing company through utility rates above and beyond what would be otherwise be required to operate and maintain the utility system in a fair and prudent manner,” Chamber President James Arenovski said.
He added, “To cause a further, artificial increase in rates would not only harm residential utility consumers but also likely prove an insurmountable challenge to remaining businesses in the commonwealth and deter new business investment.”
