GUAM POWER BILLS TO CLIMB 7 PERCENT

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By Gaynor Dumat-ol Daleno

HAGATNA, Guam (Pacific Daily News, May 9) – Plan for your residential power bill to increase about 7.6 percent starting in December at the earliest or February next year at the latest.

Guam Power Authority General Manager Joaquin Flores yesterday outlined a proposal to increase two items on your power bill because GPA needs to improve its cash position.

If its cash position weakens, GPA customers face possible power outages, and the power agency might lose a major customer -- the Navy, according to Flores' presentation.

The power agency's sales have been flat, in part because GPA customers have curtailed their electricity usage as a result of the previous increase in the "fuel recovery" portion of their power bills, according to Flores. The fuel recovery charge represents about 61 percent of residential customers' power bill, or $163 for a $268 power bill.

The GPA proposal would raise the following items on your power bill:

The base rate, which is about a third of the entire cost your monthly power, would rise by 19.72 percent, or an increase of almost $20 to the base rate using the same $268 bill as an example.

The "insurance charge" would double -- to .29 cents per kilowatt -- for residential customers. For the same $268 power bill example -- which means 1,500 kilowatts was used in a month -- the insurance charge would rise from $2.18 a month to $4.35.

And if customers use credit cards to make payment, GPA also proposes to add a $5 fee for each credit-card transaction. For every transaction, GPA pays a fee of about 1.7 percent of the amount swiped from the credit card, according to GPA management.

Raising the base rate would give the power agency an extra $26.9 million a year, of which $6.9 million would go toward pay adjustments for technical personnel and professionals, such as linemen, engineers and accountants.

GPA technical personnel and professionals are near the bottom of the pay scale when compared to stateside workers in their league and, without pay raises, GPA management fears a continued "exodus of its highly skilled technical staff."

Another component of the base rate increase would boost GPA's cash to improve the quality of its electrical service.

The Navy has complained about fluctuations to the GPA electricity, Flores acknowledged.

The Navy had signed up to be a GPA customer until 2011, but, according to a GPA report, "the Navy may de-link" if power quality does not continue to improve.

The Navy pays GPA about $17 million a year, and if the Navy de-linked from the power agency, the lost revenue "must be borne by GPA's remaining customers," according to the GPA management presentation.

The proposed increase to the insurance charge would allow GPA to boost its rainy-day fund, in the event of disasters, from $2 million now to $25 million.

The power agency could not afford the cost of paying for insurance coverage, according to its management.

Chief Financial Officer Randy Wiegand said it would have cost GPA about $5 million a year for every $10 million worth of coverage if it obtained insurance coverage for disasters such as typhoons, earthquakes and other events.

The GPA general manager acknowledged that, by raising the base rate, there's a possibility that customers might further reduce their electric consumption, and that could lead to a decline in GPA's cash position.

But at the same time, GPA does not want to go the route of what GPA management calls "the CNMI experience."

The Commonwealth of the Northern Mariana Islands utility agency held its rate constant for more than 12 years, and its customers in recent years have had to endure rolling outages, according to the GPA presentation.

Recently, the Northern Marianas utility agency implemented a 300 percent rate increase, according to GPA.

The power agency emphasized it has not increased the base rate for 10 years.

What GPA has done in recent years, however, was to implement "fuel recovery" charge increases when the global price of fuel went up to levels it could no longer absorb.

The fuel recovery charge now takes up about 61 cents for every $1 cost on every Guam residential customer's power bill.

The Northern Marianas utility agency did not have a mechanism for implementing a fuel recovery charge, said Robert Young, managing partner at economists.com, who did consulting work for GPA.

GPA management put Young on speakerphone at the GPA press conference yesterday afternoon to offer his perspective on utility costs in the Northern Marianas and stateside.

Pacific Daily News: www.guampdn.com

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