The Consolidated Commission on Utilities has authorized the Guam Power Authority to pursue no change with the next fuel surcharge so that it stays at the rate that will take effect in December which is 17.14 cents per kilowatt hour. That amounts to a bill of about $270 for residential consumers using an average of 1,000 kWh. 

This extension of the surcharge is intended to take effect in February and last through the end of July.

If the proposal is adopted by the Public Utilities Commission, this will be the first time in about a year where there is no rate increase in the surcharge. 

Formally known as the Levelized Energy Adjustment Clause, the surcharge is the part of consumers' monthly power bill that mainly pays for the cost of fuel oil. It is normally adjusted every six months to keep up with fluctuating fuel prices, but can also be adjusted in between. If prices go down, the LEAC should go down. If prices go up, so does the LEAC, as the surcharge is meant to fully cover the cost of GPA's fuel.

But in practice, GPA, its oversight body, the CCU and PUC - the final authority on rate matters - have chosen to maintain a level of "under-recovery," or loss, on fuel purchases in order to mitigate more significant increases in the rates. The difference is sometimes met with other funding, such as insurance funds or proceeds.  

Rates began increasing in February, after several months of what had been the lowest rates seen on island since 2016, as fuel prices began to increase again.

Just before August, the PUC adopted a three-tier rate schedule for the LEAC in the subsequent six months. 

The surcharge rose up to 13.04 cents per kWh in August. Then, it went up to 15.08 cents per kWH in October. By December, the LEAC will increase again to 17.14 cents per kWh, and this rate will last through January. By the time the LEAC was approved, GPA was facing significant under recovery.

Some of that loss was mitigated by $15 million out of the American Rescue Plan. 

By the end of of July next year, GPA is projecting to incur a loss of about $17 million in fuel cost if the LEAC is maintained at 17.14 cents per kWh.

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