HAGATNA, Guam (Pacific Daily News, Jan. 27) - The Guam Power Authority's Cabras 1 and Cabras 2 baseload generators will be managed by Taiwan Electrical and Mechanical Engineering Services beginning Feb. 7.

The company, which already runs a unit in Piti, was awarded the contract by the previous GPA board of directors on Dec. 30, said Joaquin Flores, GPA interim assistant general manager for operations.

"If it all goes well, it could provide a savings of up to $2 million for the agency," Flores said.

The contract requires TEMES to train GPA employees who will be working under the management team and to implement performance improvement projects.

"We support the idea of outsourcing the management because the Cabras units have not been run properly in the past," said Simon Sanchez, chairman of the Consolidated Commission on Utilities.

There were two explosions that occurred at the Cabras power plants in Piti in the past two years. Baseload generators have been inoperable for months -- for more than a year in one case -- because of the need for major overhauls in recent years, according to Pacific Daily News files.

The previous GPA board had said they would defer responsibility of awarding the contract to the elected Consolidated Commission on Utilities, which took office Jan. 1.

"We'll just work with it, even though we had objections to some of the terms of the contract," Sanchez said.

Some of those objections had to do with the length of the contract.

Flores said the contract is for three years because Public Law 26-76 -- the law that created the commission -- does not allow for the contract length to exceed three years, though there are two renewable one-year options.

Sanchez said he believes the problem with a short contract is the private company will be less inclined to invest a lot of money into the generators.

"Longer contracts, like 20-year ones, ... allow for a company to invest more money more quickly into the unit because there is less risk of losing their investment," he said.

Sanchez also said he thinks the contract could have required higher performance standards. Sanchez said the standards require the company to run the 66-megawatt generators at 70 percent to 80 percent of its generation capacity.

"Those generators were running in the 60th percentile so it's an improvement, but I felt it was a little too conservative because they could have asked a private contractor to meet higher standards like running at 90 percent," he said.

"On the other hand, I guess they couldn't have asked for much more because the contractor only has three years to recoup their cost and meeting a 90-percent standard would take a bigger investment on their part."

"We would have liked for a longer contract, but this is what the law allows for under the circumstances. This is a very good deal."

January 27, 2003

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