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Utilities Commission to consider fuel surcharge increase

By Laura Matthews HAGATNA, Guam (Pacific Daily News, Dec. 15, 2010) – Ratepayers with the Guam Power Authority (GPA) could see a 17.3 percent increase in their power bill next year if the Public Utilities Commission (PUC) gives its approval.

The Consolidated Commission on Utilities (CCU) last night approved the power company's motion to increase the fuel surcharge, or the Levelized Energy Adjustment Clause (LEAC), from 12 cents per kilowatt-hour to 15 cents per kilowatt-hour.

This would mean an additional US$34.36 to the bill for a residential ratepayer who uses 1,000 kilowatt-hours per month, according to documents GPA gave the CCU last night.

The agency will petition the PUC today.

If the Public Utilities Commission approves the increase, it will go into effect in February through the end of July. The implementation of the new LEAC would put Power Authority back to where it was in February, when the rates increased from 12.96 cents per kilowatt-hour to 15 cents.

Guam Power Authority General Manager Joaquin Flores yesterday said the increase is needed because it's likely that the price of oil will go up.

GPA spokesman Art Perez added that oil prices are projected to rise. The agency predicts that prices could be as high as US$81.39 per barrel during the next Adjustment Clause period.

Perez said the fuel increase over the last LEAC adjustment period has resulted in an under recovery of US$7 million, and to continue without any increase would mean losing an additional US$20 million since the agency has to pay upfront for the fuel. GPA will monitor oil prices as they go along.

Increasing the fuel surcharge was just one of the increases set to send customers digging deeper into their pockets next year.

The agency wanted to implement a 2 percent hike on ratepayers that would go toward the working capital surcharge that would be effective next April.

But ratepayers won't have to experience that increase until April 2012, because an unexpected US$5.1 million settlement fund from the Bank of America that will be used to offset that increase.

Flores yesterday asked the CCU to put the US$5.1 million toward that surcharge so that ratepayers aren't hit with an increase twice next year. The Power Authority will get US$5.1 million that Bank of America entities are paying to settle Justice Department allegations of misconduct in the municipal bond-borrowing business, according to Pacific Daily News files. The Justice Department recently announced that Bank of America entities have agreed to pay a total of US$137.3 million in restitution to federal and state agencies across the country for their participation in a conspiracy to rig bids in the municipal bond derivatives market.

"The ratepayers would benefit from a savings of about US$5 million," Simon Sanchez, chairman of the CCU, said during the discussions on where to apply settlement funds.

In July, the Public Utilities Commission removed a surcharge that would provide funding for the working capital fund for the Power Authority, which requires US$27 million as mandated by previous covenants. If that surcharge wasn't rescinded it would have meant an increase on ratepayers' total bill for the next 18 months, GPA has said.

Guam Power Authority will ask the Utilities Commission to allow it to put the US$5.1 million toward the working capital fund in January.

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