AP Energy questions why CUC disqualified it but allowed Eastern to proceed

AP Energy LLC is questioning why the Commonwealth Utilities Corp. disqualified it from the multimillion-dollar solar power project for failing to submit audited financial statements but allowed Eastern Power Solutions to advance despite allegedly failing to meet the same requirement.

AP Energy attorney Joseph E. Horey told Marianas Press in an Oct. 26 interview that the alleged unequal treatment prompted the company to file a motion to amend its petition for judicial review and renew its request for a temporary restraining order preventing CUC from finalizing its agreement with Eastern.

"It's being applied one way against AP Energy, but a different way against Eastern," Horey said.

The motion, filed Monday, Oct. 26, alleges that CUC violated AP Energy's right to equal protection under the Commonwealth and U.S. constitutions by applying different standards to bidders competing for the same solar power contract.

AP Energy was disqualified from advancing to the second phase of the procurement after failing to submit three years of audited financial statements.

However, Horey said testimony during the Commonwealth Public Utilities Commission's Oct. 23 hearing indicated that Eastern Power Solutions CNMI Inc., which submitted the successful proposal, also did not provide its own audited financial statements.

During that hearing, CUC executive director Kevin Watson said audited financial statements were submitted by Eastern's broader corporate organization rather than Eastern Power Solutions CNMI Inc.

Eastern chief executive officer Daniel Myung explained that the company is part of a larger corporate structure and that audited financial statements from Primary Holdings, along with documentation supporting the relationship among the companies, were provided.

AP Energy argues that financial statements from affiliated companies did not satisfy the requirement imposed on the actual bidder. The court has not ruled on that allegation.

In March, Superior Court Associate Judge Lillian Ada Tenorio denied AP Energy's earlier request to stop the procurement, ruling that audited financial statements were mandatory under CUC's request for proposals.

The court found that AP Energy had not established sufficient grounds for an injunction, although it also raised concerns involving CUC's handling of the company's appeal and a possible conflict of interest involving a board member.

Aside from seeking to amend its petition, AP Energy filed a separate motion Oct. 26 asking the court to compel Eastern to produce documents concerning its relationship with Gary Sword.

Sword is the husband of CUC board member Rosemund Santos-Sword, who participated in the board's January vote upholding AP Energy's disqualification.

Horey said Eastern was supposed to produce the documents last Friday, Oct. 23, but failed to do so despite earlier requests.

"And so we're asking the court to enforce the subpoena and to require Eastern to produce the documents so that we have the chance to look at the documents and see what's out there before the hearing," he said.

AP Energy wants to determine whether Sword's relationship with Eastern was substantial enough to require his wife's recusal from the board's deliberations.

The court has scheduled an evidentiary hearing for Wednesday, Oct. 28, at 1:30pm, to examine the relationship.

Horey said AP Energy is concerned that the agreement could be signed before the court resolves the issues surrounding the procurement.

The company is asking the court to prevent CUC from entering into a contract with Eastern until its legal challenge is resolved. Alternatively, it wants the matter returned to CUC for a hearing before a board without the alleged conflict.

Meanwhile, CPUC is scheduled to meet Thursday, Oct. 29, to consider the proposed solar power agreement ahead of Eastern's Oct. 31 deadline, after which the company has warned it could withdraw from the project.

Horey described that deadline as one imposed by Eastern rather than a legal requirement.

AP Energy has asked the court to address its motions before Wednesday's evidentiary hearing.

As of Horey's Oct. 26 interview, the court had not ruled on either motion.