Friday, July 11, 2008

The "B" Word

Food For Thought 7-11-08

Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It’s that time once again to take a look at the issues of the week, and to offer some Food For Thought.

For several weeks now, I’ve been hearing from several different sources that our government, specifically the administration is slowly coming to the realization that the problems at Commonwealth Utilities Corporation are far beyond anything they can cope with or solve. They are realizing that for far too long we had political appointees running and managing the corporation that really didn’t have the required background, expertise or experience to do the job properly. And then we had the interference from politicians who had their own plans and designs on the future of the power plant and refused to spend any money on maintenance for the engines and generators because they were just going to privatize it anyway. The money kept in surplus to order spare parts and fuel was quickly squandered and wasted. Then we had a bunch of pandering politicians seeking desperately to hold onto their jobs artificially lower the rate that CUC had to charge to residential customers, charging far less even than the fuel costs to produce the electricity, not to mention all of the other associated costs. Then this administration learned that they had been led astray and told that the repairs would be completed much sooner than was feasible or realistic. So now they had engines and generators that were breaking down on a daily basis, parts that had not been ordered yet that were needed for overhauls of the engines, no end in sight of the rolling blackouts, and they were continually unable to pay for adequate fuel shipments to run the generators for the next month.

When you find yourself in the middle of a situation like this, it severely limits your options. You realize that continuing to depend on fossil fuels to produce your electricity will not be sustainable much longer, yet you have no money to invest in alternative energy sources. So do you continue throwing millions of dollars into the old, inefficient generators we have? Do you invest in new generators that will continue to burn expensive diesel fuel that you know you won’t be able to afford to pay for, and that will drive the cost of electricity so high that no one will be able to afford to live here any longer? Or do you eventually come to the realization that the problems have spiraled out of control to the point that there is no possible way you can begin to address all the issues and come up with a workable solution? Do you finally have to start discussing the “B” word? And can you discuss the “B” word since the utility is owned by the government, without admitting that the entire government is also teetering on the verge of the “B” word as well? The “B” word in case you are wondering, is Bankruptcy.

I have heard from several different people in the last few weeks that the administration is getting closer and closer to the conclusion that bankruptcy might be the only viable option they have left, and that it has been discussed extensively. Could that also be the reason that the administration placed an accountant in charge of the failing utility company instead of a power plant operations manager or engineer? Was his sole objective to get the financial books organized enough to be able to formally declare bankruptcy? When I had Tony Muna on my talk show last week, I came right out and asked him whether the administration has been considering declaring bankruptcy for CUC. He was reluctant to answer the question at first, and wanted to point out all the things the administration has tried to do to avoid this. He blamed the Retirement Fund for not being willing to give CUC the loan a couple years ago, then he blamed the legislature for lowering the rate the utility had to charge to residential customers. Yes, we all know there is plenty of blame to go around, but the question I asked was whether the administration has been discussing putting CUC into bankruptcy. After dancing around the issue for the better part of a half hour, Tony finally came out and said yes, the administration has been discussing the viability of declaring bankruptcy for CUC. He was careful to point out that it was not the course of action that had been definitely decided at this point yet, but it was certainly one of the options that were being considered.

But the mere fact that bankruptcy is even being considered for CUC brings up a whole host of other questions. If the administration, who is in effect running CUC at the moment, declares the utility is bankrupt, where does it go from there? Do they march into Judge Munson’s federal courtroom and say, here you go, we don’t know what to do with it anymore or how to solve the problems? Would Judge Munson have the authority to appoint a receiver to oversee the operations of CUC from that point forward? Who would then be responsible for paying for future fuel shipments? Would a receiver have the authority to take bids and privative the utility company? If the utility company were under the direction of a federally appointed receiver, would that mean that they could tap into federal funds to bring in alternative energy producing plants, whether wind, wave, solar or deep cold water ocean thermal energy conversion?

I think the administration has finally realized that just going to the federal government asking for financial help while continuing to have a dysfunctional, corrupt, inefficient and malfunctioning system in place to operate the utility company isn’t going to work. We’ve tried that before, and the federal government is tired of throwing good money after bad. I think they are going to want to see some real reforms and changes before they bail us out again. They are going to want to be sure we don’t find ourselves right back in the same position in another 10 years. And they should put some very strict demands on any help they wind up giving us, as we haven’t always been known to honor our previous agreements.

But should the receivership stop with just the utility company? What about Commonwealth Health Center? It has been swimming in a sea of red ink for more years than I can count. Their billing department there is a complete joke and they can’t seem to keep the staff or equipment they need. Could a federally appointed receiver straighten out their messes as well and get them on the path to being a professionally run and operated hospital?

And what about our Retirement Fund? Will they be financially solvent 10 years from now? Will retirees actually be receiving their checks? But is that really the Retirement Fund’s fault, or is it the fault of the government who isn’t paying the proper contributions to the Retirement Fund? And if the government isn’t paying all their obligations and doesn’t have enough money to meet all their financial obligations, should they be placed under receivership as well? After all, what is the definition of bankruptcy? Isn’t it when your liabilities exceed your income and your assets and you have no way of generating enough income to pay for all your liabilities? If that is the definition of bankruptcy, I’d say our local government has been operating in bankruptcy for several years now, or not operating as the case may be. It wouldn’t be the first time that a government was bankrupt and placed into receivership. It happened to Orange County, California several years ago. And while you may say, but wait, that was only a county government, not something like the Commonwealth government, you need to realize that the population of Orange county is far, far higher than that of the CNMI, and the scale of everything was that much bigger as well.

There are those that would say the federal government has no business intruding into our affairs, and they should only be there to give us money and nothing more. We have the right of self-governance and the right to choose our own leaders and then watch them run things straight into the ground. That may be true, but then the federal government also has the right to say no to our continued requests for funding to bail us out of whatever the current mess is. I’m sure they are getting tired of watching the same scenarios play out over and over out here, while we never seem to learn any lessons from it, or hold any of those who got us in these messes responsible. Honestly the federal government would have to be insane to offer us any financial assistance. The definition of insanity is doing the same thing, in the same situation over and over and expecting different results each time. The federal government knows our track record and has watched us repeat the same mistakes over and over again. If they were to give us money again without requiring some drastic changes, they would fit the definition of insanity.

We just keep electing the same ones who got us into these problems right back into office, which is why our last governor actually thinks he has a chance and is planning on running to be governor again in the next election. He’s counting on the fact that you’ll forget he kept claiming things were pretty darn good when he was in the process of destroying CUC and letting our economy quickly flush down the toilet. He’s hoping that you won’t put 2 and 2 together and realize that he’s a big part of the reason we are in the messes we are in right now. If insanity is doing the same thing over and over again expecting different results, then what would voting for any politician once again who you’ve already given a chance to and who has failed you be?

Yes, we have fewer and fewer options available to us these days, and maybe that’s what it’s going to take to finally effect any real and meaningful change. The “B” word may be closer than you think, or at least finally admitting that is where we are, and have been.

Food For Thought is now available online at and if you want it by e-mail distribution please send me an e-mail at

I’m Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.

No comments: