Well spotted. Thought I would post it in full - since it is...

Well spotted. Thought I would post it in full - since it is critically important to the future of this company.

McDonald is right - it doesn't make sense on the face of it. And pointless going to court.

*******

Geothermal energy firm hopes NMI will honor contract Tuesday, August 21 2012
By Andrew O. De Guzman

KUTh Energy Ltd. of Australia is hoping the administration will honor the exclusive concession awarded to the company to develop geothermal power in the commonwealth despite the governor’s controversial $190 million deal for a diesel-based power plant.

The U.S. Department of the Interior provided $1.2 million in funding assistance for geothermal exploration and development in the CNMI. The Commonwealth Utilities Corp. then selected KUTh Energy to drill a 600-meter deep geothermal gradient well, which is also known as the stage one geothermal gradient project.

KUTh Energy managing director David McDonald said in an email: “The intent to award was based on a very comprehensive response to a request for proposal. We were shortlisted and along with the other shortlisted candidates we presented to the selection committee in Jan. 2012 and were advised to be the successful candidate and then the intent to award was issued.”

He added, “I would like to think that the CUC/CNMI government would proceed with contract since they were the ones who initiated the RFP and the intent to award after a lot of work was put into the tender process.”

He said the “proposed diesel generation contract is something that we are still investigating to fully understand how this fits into the Saipan power strategy.”

McDonald said they are “struggling to understand why a diesel power generation would be prioritized over renewable energy initiatives. The ability to generate electricity from your own resources (such as geothermal) will supply base load power, energy security (rather than being totally dependent on imported fuel for your power), lower cost and a stable pricing (imported diesel will always be subject to the price on international markets).”

Last May, Gov. Benigno R. Fitial declared a state of emergency for CUC due to its lack of funds and technical workers as well as its “inability to procure renewable energy.”

According to McDonald: “We would like to think that the CNMI government will sort this out and honor the issue of contracts to the successful RFP players. This seems to be the stated aim of the [governor] in the recent executive orders…. CUC has gone through the RFP process for several renewable energy projects which would bring some relief to high utility rates. These contracts must be brought to completion as soon as possible or customers will continue to suffer from high oil prices’.”

When asked if they’re considering legal action, McDonald said: “Before considering any legal position we believe the best course of action is to engage closely with the government to be sure their stated objectives still remain and we can work to close the contract.”

He said their next action is to meet with acting Gov. Eloy S. Inos “so we can get this all resolved.”

McDonald added, “It is not helping that we have been told that we cannot deal with CUC directly to sort this out and we cannot get to [Inos] to try and spend some focused time to…work through these issues.”