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