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Military, civilian delivery systems separate since WWII

By Brett Kelman HAGATNA, Guam (Pacific Daily News, Dec. 27, 2010) – In the Northern Mariana Islands, a federal bill could consolidate Guam's dual water systems and make the military a customer of the Guam Waterworks Authority (GWA). But if the bill is passed as is, the transition could be expensive.

The National Defense Authorization Act of 2011 has been passed by Congress and is awaiting the signature of President Obama. The bill once promised war reparations, and although that language has been removed, it could still unite the island's civilian and military water systems.

The separate water systems are the "last bastion" of an old, post-war Guam, when infrastructure systems like power, telephone and airports were all separate, said Simon Sanchez, chairman of the Consolidated Commission on Utilities.

Today, the dual water systems plan separately, expand separately and sell services to each other, creating unnecessary complexity and redundancy, Sanchez said.

If Guam were re-built from scratch, nobody would choose to have separate systems, Sanchez said.

"We can understand why it happened historically but now we have a chance to fix it, Sanchez said. He added later: This is a chance to finally get the military out of the infrastructure business."

Currently, GWA buys water from the Navy for areas like Santa Rita, Agat and parts of Piti, Sanchez said. And all of Andersen Air Force Base uses the civilian sewage system, so the military pays Guam Waterworks Authority for that, Sanchez said. In smaller doses, the Navy buys water from GWA and the Guam Waterworks buys some sewage capacity from the Navy, Sanchez said.

The systems are tethered together, and so are their rates. When the Navy raises its water rates, GWA must spread the additional cost to all of its ratepayers, Sanchez said.

According to a press release from the Office of Delegate Madeleine Bordallo, the National Defense Authorization Act "establishes a clear authority for the secretary of defense to convey the Navy's water and wastewater system, including Fena Reservoir, to the Guam Waterworks Authority to establish and integrated system that is run with the military as a customer."

That provision of the bill outlines how GWA would pay the military fair market value for the Navy's system, although this payment could be paid over a 25-year-period, the release states.

Although Guam Waterworks and the military have been discussing consolidating for years, the idea that GWA would pay fair market value is new, Sanchez said. The military has recently spent a few hundred million dollars upgrading their system, which made its value skyrocket, he said.

"A couple hundred million dollars, even over 25 years, isn't going to be cheap," Sanchez said.

In contrast, Sanchez points to the consolidation of Guam's power systems, which began in the '80s and became official in 1992, when the military became a customer of the Guam Power Authority (GPA).

Back then, the military transferred its power systems to GPA through a longer-term, no-cost lease, Sanchez said.

GWA wants the same deal.

"I guess that's the challenge in trying to pull all of this off," Sanchez said. "In the GPA transfer, Guam didn't have to pay fair market value. We want to revisit the idea that Guam doesn't pay anything for the system."

The National Defense Authorization Act presents an avenue to offset the value of the Navy's water system, but Sanchez said that raises more questions.

According to Bordallo's press release, the bill says the secretary of defense "must consider the value of unpaid Compact-Impact reimbursement in determining the total cost of the conveyance. This might be a way to get the system to cost less for ratepayers, Sanchez said, but however that would be sacrifice Compact-Impact money that many (local leaders) believe is owned."

Some Guam politicians, like Sen. Frank Blas Jr., argue that the federal government owes Guam millions of dollars because Compact-Impact reimbursement has been under funded since 1986.

This funding is given to Guam to offset the cost of providing government services to immigrants who come from freely associated states like the Federated States of Micronesia.

Currently, Guam gets about US$14.8 million a year, Blas said, but that isn't even close to enough to offset the actual cost of these services. And the payments used to be smaller, so Blas argues a sizable debt has grown over the years.

Today, the debt is worth about US$451 million, Blas said, although the federal government has never acknowledged that number.

Regardless, Blas doesn't believe the Department of Defense will accept a plan to use the Compact-Impact debt to offset the cost of the Navy water system.

"They believe that Guam should only have one water system, but they don't know whether not to use that vehicle to make those payments. They are not confident in that payment structure, Blas said. The Department of Defense needs the hard cash."

Like Blas, Sanchez questioned the plan to use Compact-Impact to offset the cost of the Navy's wastewater system.

There is no guarantee the Compact-Impact debt will be paid, Sanchez said. So he questioned how the island can use money to offset a cost if the money never comes.

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