Company threatens to pull out of $250M solar project if CPUC fails to act by Oct. 31

Eastern Power Solutions has warned that it will withdraw from the Commonwealth Utilities Corp.’s proposed $250-million solar energy project if a power purchase agreement is not executed by Oct. 31, putting a major renewable energy investment in the CNMI at risk.

The warning came during a special Commonwealth Public Utilities Commission meeting last Oct. 16 at Marianas Business Plaza, where CPUC members continued questioning the project's corporate structure, financing arrangements, and liability provisions without voting on the proposal.

Eastern Power Solutions chief executive officer Daniel Myung, who appeared electronically during the meeting, said the company faces a tight financing and construction schedule to qualify for federal investment tax credits tied to a Dec. 31, 2027, deadline.

“Should you not be able to reach a decision by October 31st, 2026, we are unfortunately withdrawing our participation in this bid, and we will be withdrawing our proposal,” Myung told CPUC.

He said the company needs an executed power purchase agreement before proceeding with financing and other preparations for construction.

The Oct. 31 deadline is the company's internal financing deadline rather than a government-imposed cutoff. CPUC members questioned whether approving the agreement several days later would necessarily jeopardize the project.

Myung maintained that the company needs sufficient time to complete the project by the end of 2027 to qualify for federal investment tax credits.

The proposed agreement would allow CUC to purchase solar-generated electricity at 18.5 cents per kilowatt-hour over 25 years without a price escalation provision.

CUC legal counsel Tina Ngo warned that losing Eastern Power Solutions could force CUC to negotiate with other bidders whose proposed electricity rates were higher.

Ngo said competing bids submitted about a year ago included rates of 22 and 26 cents per kilowatt-hour, compared to Eastern's 18.5 cents.

She cautioned that those rates could increase because contractors would face greater risks of missing the federal tax credit deadline.

The project depends partly on federal investment tax credits expected to cover approximately 30% of its financing. Project representatives said failure to complete construction by Dec. 31, 2027, could jeopardize that funding.

CPUC members, however, maintained that they must resolve outstanding questions before approving the agreement.

Among the issues raised was the relationship between Eastern Power Solutions, NESS Inc., and Naftan Solar, the project entity identified in the proposed power purchase agreement.

CPUC legal counsel James S. Sirok questioned which company would ultimately be responsible for damages or contractual defaults if the project encountered problems.

Sirok also sought additional corporate documents and clarification of the relationships among the entities involved.

Eastern representatives explained that the arrangement follows a financing structure commonly used in large-scale renewable energy projects, with a separate company created to own the project and another responsible for construction and maintenance.

They said including Eastern Power Solutions directly as a party to the power purchase agreement could affect the financing structure required by lenders.

The parties discussed possible revisions to clarify their respective responsibilities and liability provisions.

CPUC members defended their continued scrutiny of the project, saying they needed to perform their due diligence and ask legitimate questions before making a decision.

The meeting also addressed how the solar project would affect electricity rates.

CUC consultant Robert Young estimated that incorporating solar-generated electricity into the utility's fuel adjustment charge could reduce the charge by 3 to 6 cents per kilowatt-hour, depending on diesel prices and solar generation.

After being informed that the project targets 40% renewable energy penetration, Young acknowledged that the reduction could be greater but cautioned that future fuel prices would determine the actual savings.

CPUC members asked CUC to provide written estimates showing how much ratepayers could expect to save.

The meeting also covered outstanding fuel invoices and CUC's financial reporting. CPUC sought additional documentation and clearer comparisons of the utility's expenses, collections, and unpaid bills.

No approval was issued for the solar project during the meeting.

Following the meeting, Ngo took to social media to express frustration over the continued delay, warning that the project could collapse if CPUC fails to act before Eastern's deadline.

“They still have not voted to approve the project. They're kind of just sitting on the vote, which is not good,” she said.

Ngo said continued delays threaten the project's financing because the contractor needs sufficient time to qualify for federal investment tax credits covering approximately 30% of the project's costs.

“The project will be dead,” she warned, referring to Eastern's possible withdrawal.

Ngo said CPUC would likely meet again next Friday, Oct. 23, although the schedule had not been confirmed.

She also urged residents who support the solar project to attend the next CPUC meeting and express their views.