Shady Power Plant Agreement Protested by CUC

December 27, 2012

Saipan Development LLC's  attorney Bill Fitzgerald has been defending the sketchy $190 million power plant deal signed by the hastily formed Saipan Development LLC, Governor Fitial and former CNMI AG, now fugitive, Edward Buckingham.

Earlier this year, several legislators filed a citizen lawsuit to stop the power plant agreement from proceeding. Protesting the injunction granted by the court, Fitzgerald asked, "Where is the evidence that this is a bad deal for the CNMI?"

The Commonwealth Utilities Corporation (CUC), named as a defendant in the lawsuit, has now stepped up to provide the evidence that Fitzgerald requested.

CUC Attorney Deborah Fisher filed a 15-page motion detailing the problems and illegalities with the agreement. It states, “The plaintiff is likely to prevail on the merits as the PPA is illegal on its face and did not meet CUC procurement regulations or CNMI legal requirements.”

For years Governor Fitial has been signing dozens of  executive orders or "emergency declarations" that gave him dictatorial decision-making powers over numerous CNMI departments and agencies, including the CUC.  He extended one such emergency declaration for CUC in July 2012, perhaps assuming that it gave him the power and legal authority to sign the backdoor deal with Saipan Development LLC.

However, Fisher's motion to deny Saipan Development LLC's motion to vacate the preliminary injunction states that Fitial's executive order declaring a state of emergency at CUC suspended the Public Utilities Commission regulation, but did not suspend the CUC's procurement regulations or statutes which provide for the utility’s procurement requirements. The motion states that the agreement did not go through the proper procurement process and it lacked the signature of the CUC executive director and chief financial officer making it void.

From the motion:
“The governor did not have authority to sign a development agreement that essentially awarded a power plant privatization to a developer without going through the utility’s procurement process. In addition, the actions of the former Attorney General, Edward Buckingham, were without authority. Under the procurement regulations, ‘the attorney general or legal counsel for the utility shall certify the form and legal capacity of every contract.’ NMIAC §50-50-115(c). The attorney general did not have the authority to affirm that a contract on behalf of the utility was legally sufficient when it did not meet the most basic requirements of the utility’s procurement regulations on its face as required by law. Accordingly, the fact that the PPA is signed by CNMI officers does not make it a legal document, but rather it is void ab initio.”
Aside from the illegalities of the contract, Fisher also outlined the disastrous economic impact that the deal would have for taxpayers and utility customers. An affidavit by CUC Chief Financial Officer Charles H. Warren and an analysis of the PPA conducted by Texas-based economists Dan Jackson and Robert Young revealed a hidden $18 million in costs for decommissioning the current substation, establishing the new substation and establishing a fixed escrow account.  That figure did not include any expenses to be incurred for contamination cleanup, if found.

Fisher stated if the injunction is lifted and the PPA was pushed through then utility customers would see an 88% increase in utility bills over one year.

Fisher said that the PPA calls for Saipan Development to receive a 10% penalty if the agreement is cancelled. That would be between $7 - $19 million.

How can anyone defend this corrupt deal?


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Anonymous said...

Ironic. A few months ago CUC was the most evil agency in the CNMI. Now they're hailed as heroes standing up to the devil himself. CUC remains the most corrupt, shady and deceitful organization in the CNMI. They don't pay their vendors on time, they are a joke. Their lawyers are cashing in on this fiasco.

Wendy Doromal said...


I don't know if CUC is shady or not, but how could CUC pay its vendors when PSS, CHC and so many other government agencies consistently owe the agency millions in dollars and fail to pay their CHC bills on time?

Regardless of CHC's standing, at least the agency has conducted an independent investigation/evaluation of the PPA and the public now has more information on the truly questionable Saipan Development-Fitial-Buckingham scheme.