The House agenda changed once again on the floor during this week’s sessions on March 26 and March 27. The following items were added:
HOUSE BILLS
HOUSE LEGISLATIVE INITIATIVES
HOUSE COMMUNICATIONS
ACTION TAKEN
COMMENTS
On the confirmation of Ms. King-Hinds to the PUC
The five members who objected to the confirmation of Ms. King-Hinds cited several concerns, all related to questions about whether or not Ms. King-Hinds has a conflict of interest in serving on the PUC. Some believed that private water bottling companies (such as the one that Ms. King-Hinds manages on Tinian) might be subject to regulation by the PUC. I was one of the members who held this view. I submitted my statement (Remarks on Hinds Nomination) and during the discussion on the floor pointed out that private water companies are commonly regulated by public utilities commissions, and the language of our PUC law (as I read it, anyway) did not clearly exclude private water companies from PUC regulation. Members said that two legal counsels had already indicated their view that private water companies are not subject to PUC regulation; I responded that in both instances we had given the legal counsels only a few minutes to glance at the law and give us off-the-cuff opinions. I requested that we give the House legal counsel time to research the issue and give us a written legal opinion about whether or not there is in fact a conflict of interest; another member requested an opinion from the Attorney General’s Office as well.
Other members felt that the conflict of interest stemmed from the fact that Ms. King-Hinds’ water company does business with CUC. They said that her company purchases water from CUC, treats it, and then sells it to the public. One member recalled that the USEPA and CUC had recently given the Legislature a presentation on the stipulated order that is about to be issued to address CUC’s chronic water and wastewater violations, and that this order is likely going to require a raising of the water rates. How would Ms. King-Hinds make a decision involving an increase in rates that will directly affect her cost of doing business? (Moreover, how would any of us know since none of us had ever asked her?)
The majority of members disagreed and felt it would be unnecessary to delay Ms. King-Hinds’ confirmation any longer, while we waited for a written legal opinion, and others pointed out that if in fact a conflict of interest existed, that Ms. King-Hinds could always recuse herself from decisions that could potentially involve her company. I objected and said that it should be important to us to get the PUC off on the right foot — particularly since this would be the regulatory body overseeing a utilities corporation that has been fraught with mismanagement and improprieties for so many years. Why taint the PUC with either the fact or the appearance of a conflict of interest right from the beginning?
Nonetheless, there was a motion to end debate and vote on Ms. King-Hinds’ nomination, and she was confirmed. It should be noted that the five members who voted against her confirmation included the Chair of the House PUTC committee, Rep. Stanley Torres (who resigned from the chairmanship that day in part because of what he perceived as pressure from the leadership to rubberstamp Ms. King-Hinds’ nomination); the Chair of the Saipan delegation PUTC committee (myself); and two former PUTC chairs (Rep. Frank Dela Cruz, who was one of the authors of the law that created the PUC, and Rep. Hofschneider).
On HB 16-79
Of all the co-sponsors of HB 16-79, Speaker Palacios is probably the easiest target for criticism because he was the author of PL 15-94, the public law that rolled back CUC’s rates to 17 cents/kwh. Speaker Palacios has already been accused of pandering for votes and then promptly forgetting the needs of the people once elected. These accusations are extremely unfair and simplistic. We can imagine that the sincerest of intentions were behind PL 15-94 — particularly, the desire to give relief to our community, which has been suffering under exorbitant utility rates and a mismanaged utilities corporation. I think it is fair to say that we all share that desire in the Legislature. The mistake was in passing PL 15-94 without first ensuring that funding would be available to cover the shortfall that it created. Subsequent efforts to identify such funding ultimately failed.
The legislative process is such that Representative Palacios did not act alone and was not solely responsible for the passage of PL 15-94. That law could not have passed without the overwhelming support of the members of both chambers of the 15th Legislature — enough support to override the Governor’s veto, in fact. The failure to identify a subsidy to cover the shortfall created by PL 15-94 was therefore not just one person’s failure, but the failure of all the members of the 15th as well as the 16th legislature.
Leadership is not about never making any mistakes, but about recognizing when mistakes have been made, when even the best of intentions fall short of feasibility — and then being willing to take corrective action. Nearly all the members of the House recognized that PL 15-94 needed to be repealed in the absence of any subsidy to cover the full cost of fuel; few seemed willing to take the initiative to introduce the repealer. (Indeed, I heard more than one member in the House say that they would be willing to support the repealer, but would not put their names on it because that would be “political suicide.”) The Speaker took that initiative and introduced a bill to repeal a law that he himself had authored. It was not an easy decision, and the humility and courage of that decision demonstrates his capacity for leadership — the kind of leadership we need more of in the CNMI.
On another note, the Legislature has deservedly received a great deal of flak for passing and repealing laws with astonishing rapidity. I have objected to that practice myself, and have also objected to the chronic suspensions of rules that permit bills to be fast-tracked. And so it was a difficult thing for me, just on principle, to be one of the main authors of a bill to quickly repeal a law that had been passed just months before when a) the bill had not been prefiled and there was no public notice of when it would be officially introduced (with the exception of an email I had sent out that day when my co-authors and I were ready to introduce it); and b) I knew that the bill was going to be placed on calendar that day and would likely pass on first and final reading.
Although the Open Government Act does not currently apply to the Legislature, I try to act as if it does. And it is worth noting that the Open Government Act permits the waiving of public notice requirements in emergency situations when delays caused by such notice would increase the likelihood of injury to life or property. I strongly believed that the $1million dollars/month shortfall created by PL 15-94, and the resulting inability of CUC to purchase sufficient supplies of fuel for the month, which in turn exacerbated its already failing ability to provide utility services, created an emergency situation, and warranted the waiving of public notice for the bill to repeal PL 15-94.
Finally, as I stated on the floor this week, I think that most people recognize the necessity of repealing Pl 15-94, and would be resigned to continuing to pay rates that reflect the true cost of fuel if they could be assured that there was some light at the end of the tunnel. And there are some signs of that light as we are all seriously considering concrete measures to provide relief and reliable utilities to the people of the CNMI — most notably in the initiatives introduced by Rep. Hofschneider to allow borrowing for the overhaul of utilities and his bill that sets down guidelines for the privatization of CUC, including requirements for renewable energy; in the bill introduced by Rep. Ralph Torres and others that would provide some measure of relief to low-income households and families with members having debilitating illnesses; in the introduction of a bill by Rep. Joseph Camacho that would improve transparency at CUC by mandating the ready availability of all pertinent statutes, rules and regulations for customers; in the establishment of a quorum for the Public Utilities Commission; in the long-term energy plan initiated by the Saipan delegation’s PUTC; and in the shift in public sentiment towards privatization of CUC and improvements in the management of our utilities.
ANNOUNCEMENTS
Reminder: all bills and initiatives introduced in the House can be accessed at the Floor Leader’s website, www.camachocnmi.com .
Thank you and have a good week.
Personal Comments on H.B. No. 16-77
April 16, 2008
The Honorable Christina M. Sablan
Representative
House of Representatives
Sixteenth Northern Marianas Commonwealth Legislature
P.O. Box 500586
Saipan, MP 96950
RE: Comments on H.B. No. 16-77
Dear Representative Sablan:
Thank you for the opportunity to comment on House Bill No. 16-77 (Hereinafter referred to as “Bill”). Posted below, please find my comments for your information and review.
The Bill seeks “to allow and encourage the CUC to engage the private sector to partner with the Commonwealth to secure reliable utility services at affordable rates; and for other purposes.” After examining this piece of legislation in its entirety, it occurred to me that not only is the introduction and immediate passage of the Bill “necessary and proper,” it is also long overdue.
Now, rather than resort to a lengthy and tiring lecture on the many problems that plague CUC and the deplorable services it currently provides (which apparently is no longer a secret in the commonwealth), I decided to instead provide you with my reasons for supporting this Bill.
At face value, the Bill may receive resistance by some quarters; particularly, those who have yet to read the Bill and understand it fully and the fact that most employees currently working at the CUC (that may be directly affected by the enactment of this Act) may not be so enthused with the passage of such an initiative. Nonetheless and speaking as a CUC consumer, I strongly believe that it is “high time” that this utility agency be run in a business-like manner. H.B. No. 16-77 lays the much-needed framework with regards to addressing this concern.
To be brutally honest with you, I ask, what would a near bankrupt corporation do in order to stay afloat? Would it 1) Continue to run itself to the ground (in effect, maintaining the status quo) and pray for some kind of miracle (in the form of a government “bailout”) or 2) Institute practical and much-needed changes in order for it be successful and self-reliant? Logically, this corporation would subscribe to the latter approach.
Next, kindly allow me to give you a scenario based on my understanding of this Bill; particularly, Subsection 3(b)(1), which really “caught my eye.”
Let us assume that a nearly broke government entity that employs 12 accountants and one (1) Manager or Fiscal and Budget Officer pays out $250,000 in salaries and benefits to these 13 employees. Would it not be fiscally prudent for this government agency to procure the services of a private Accounting Firm that would charge much less (about $50,000 a year depending on the size of the department) but capable of performing the same amount of work produced by the aforesaid 13 employees? Or will it continue to employ 13 accountants and pay them accordingly with benefits included? It is interesting to note that not only will this entity continue to pay these salaries, the party (in this case, the Accounting Division or the “payee”) it makes this payments out to would be the very same party that advises upper-management (or, the “payer”) that the company’s funding is scarce. Do you not find it mind-boggling that the agency that knows it does not have money or is cognizant that will soon run out of funding continuously pay itself for this finding. Outrageously ironic if not disturbing, don’t you think?
Another example would be in the area of maintenance. While engines are running fine given that they are periodically being maintained, is it really “essential” or cost-effective for CUC (considering its poor financial state) to continue to employ FTEs for this purpose?
Honestly, with all these power outages, it is without question that these generators have not and are still not being properly maintained. This brings me to my next question. At this juncture, who is held accountable for the power calamities resulting from poor maintenance and planning? The Administration, the Legislature, or the CUC? While the answer to this question is obvious, the answer to my next question is equally a “no-brainer.” In the end, who suffers as a result of years of mismanagement and poor planning? More appropriately, who continues to suffer? The consumers, of course.
In any event and to avoid veering off topic, I strongly believe that if some, if not all, the essential services (i.e. Accounting and Maintenance sections) at the Commonwealth Utilities Corporation are privatized, such action would almost immediately yield recognizable results or significant improvements in the services that this agency provides to the public.
Again, I want to thank you for the opportunity to comment on this important piece of legislation. Moreover, I want to also applaud you for your efforts in offering solutions to the CNMI’s power woes and at the same time, pen my full endorsement on H.B. No. 16-77. As mentioned earlier, this Bill is long overdue.
Respectfully,
/s/ Kimo Mafnas Rosario
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