As soon as this week, the Consolidated Commission on Utilities could decide on the proposed contract for a new power plant the Guam Power Authority has been working on for the last several years.
The CCU functions as GPA’s board, so we might not see a lot of vigorous and healthy skepticism or devil’s advocacy from the commission on behalf of ratepayers and the rest of the public.
But ratepayers and the general public do need to understand in simple terms the nuts and bolts of this proposed contract before it becomes final. This is potentially a $400 million power plant, by GPA’s prior estimates. It also represents a $3 billion “net present value,” over the 25- to 30-year term, to the winning bidder, which in all likelihood is a partnership led by South Korea’s Korea Electric Power. The power authority’s future supply stability rides on the approval of this contract.
Senators, governor must advocate for the people
We hope that at the Public Utilities Commission’s rate regulatory level, the PUC commissioners will scrutinize and vet the terms of the contract, and compare them with the claims GPA has made in pitching the new power plant idea to the public.
We also need senators and Gov. Lou Leon Guerrero’s administration to look at the proposed contract and tell us what they think it would mean for ratepayers. And if they have concerns, hopefully they’ll tell us, or pause the proposed deal until issues can be resolved or doubts can be laid to rest.
The cost of electricity and a stable power supply affect all of us. When big generators fail, businesses, schools, restaurants, offices and water pumps shut down, and it disrupts our way of life. And we can’t route emergency power from a neighboring state.
The cost of electricity on Guam takes a big chunk out of a low- to middle-income household’s monthly budget. Businesses get hit with additional major costs when GPA raises the base rate portion of the contract or the fuel surcharge components of the contract.
Important factors have changed and need to be re-evaluated
There are certain important variables that have changed since GPA pitched the idea of one massive power plant for the island. This power plant would still be powered initially by ultra-low-sulfur diesel. The proposed power plant can also be fueled by liquefied natural gas, but LNG infrastructure isn’t in place on Guam and won’t be for years.
One of the biggest changes in GPA’s pitch is this: The base rate portion of a customer’s power bill isn’t going to decrease. This is contrary to GPA’s claim just a few years ago that the new power plant would lower the base rate.
For an average residential bill, the cost of the base rate would increase by an estimated 11.8% or by $10.80 – to $102.06 in 2023, according to GPA General Manager John Benavente’s recent presentation to the CCU.
His presentation also showed the fuel surcharge on an average customer’s monthly residential bill would decrease by $29.48. This would mean a net decrease of 8% or $18.68 on an average monthly power bill.
GPA added that LNG is “anticipated” to be in use possibly by 2026, leading to a savings increase of $40 million to $45 million.
Projections are unreliable; a long-term energy master plan is what’s needed
These are pretty optimistic projections considering that fuel prices have been erratic and are subject to world events and market disruptions. GPA’s optimism, in part, is based on the new plant’s greater fuel efficiency.
These are all good, if not surprising, things to hear. It is, after all, GPA’s job to continue to market the new power plant.
We need elected officials to advocate for the interest of the ratepayers and the public by looking closely at the details of this proposed deal and how assumptions incorporated into it were made.
We also hope that senators and the governor’s office will be proactive in helping to craft a new and comprehensive long-term energy plan for the island – a policy that takes into account island residents’ growing desire to rely less on GPA and more on solar and other solutions that let consumers choose whether to stay with GPA.