The governor said he is saddened by the Senate’s action and expressed fear that the move may further aggravate CUC’s shaky financial situation.
“I discussed this issue with the Legislature,” he told the Variety. “I think [this bill] would create a major problem because I don’t think we can find $250 million anywhere to provide the privatization. I think it’s more of an anti-privatization [bill],” he added.
Except for Sen. Luis Crisostimo, D-Saipan, all senators voted in favor of overriding the veto of House Bill 16-77, or the CUC Private Sector Partnership Act of 2008.
The House of Representatives is scheduled to hold a session this Wednesday.
Senate President Pete P. Reyes, R-Saipan, and Speaker Arnold I. Palacios, R-Saipan, earlier told Variety that the Legislature would override the veto.
Reps. Heinz S. Hofschneider, R-Saipan, and Victor B. Hocog, Ind.-Rota, sponsored H.B. 16-77.
Their bill requires the winning bidder to infuse fresh capital of $250 million in cash or a combination of cash and equivalent infrastructure improvements.
The governor said this would translate to huge expenses for CUC’s consumers based on his advisers’ analysis.
“The rate impact of a successful bidder to purchase 100 percent of CUC’s assets and operations for power generation and paying $250 million would translate into a rate impact at current kilowatt hour sales of 20 million kwh monthly, assuming 10 percent return on investment, plus recovery of principal over a period of 40 years, of 10 cents per kwh,” he said.
The governor also took issue with the bill requiring the company that will operate the power plants to have five years experience in emission compliance in accordance with U.S. Environmental Protection Agency regulations.
This, he added, may preclude international companies with experience in power plant operations from participating in the bidding process.
He also finds the section requiring CUC to bear the costs of the Public Utilities Commission’s review of CUC’s actions in any protest, rate case, among other things, as problematic.
“Budgeting for a variable and unpredictable cost such as this will impact the rate further,” he said in his veto message.
