850 Guam Power Customers Mistakenly Billed For High Usage

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Homes, businesses ‘misclassified,’ fees increased 50 to 70 percent

By Brett Kelman

HAGÅTÑA, Guam (Pacific Daily News, June 20, 2012) – About 850 Guam Power Authority (GPA) customers -- mostly small businesses and large homes -- were overcharged because they were misclassified in agency records.

These customers were mistakenly placed in a category reserved for customers who use more than 6,000 kilowatt hours a month, although they use less power than that, said Simon Sanchez, chairman of the Commission on Consolidated Utilities.

Because of this mistake, the 850 customers faced a new "demand charge," which took effect in May and caused power bills to climb, Sanchez said. To fix the mistake, GPA will identify the customers and credit each of their accounts, Sanchez said.

Customers who were misclassified will receive a letter from GPA sometime soon, Sanchez said. The agency may have to discuss its response plan with the Public Utilities Commission before it can act, he said.

Many of these customers may have been misclassified for years, but this hasn't had any impact until May, when GPA introduced a new rate system and demand charge. Customers had either been in the wrong classification or they were not reclassified after they reduced their power use years ago.

In addition to the classification mistake, the "demand charge" that GPA applied to power bills in May was much higher than expected, Sanchez said.

About 350 customers were supposed to pay the new demand charge, which was supposed to increase power bills by less than 10 percent, Sanchez said. Somehow the new charge boosted bills by about 50 to 70 percent, Sanchez said.

GPA hasn't identified what caused the mistake, he said, but the bills of these customers will be corrected also.

"We didn't intend to double anyone's bill," Sanchez said. "We never would have asked the community to accept a rate change that would double power bills for a base rate increase."

Customers qualify for the demand charge if they consistently use more than 6,000 kilowatt hours a month. If customers can stay below that mark for a year, they should be reclassified and no longer face the demand charge, Sanchez said.

However, GPA also has identified about 300 more customers who may be allowed to dodge the demand charge. These customers have been below the 6,000-kilowatt hour mark for several months -- but not a year -- and GPA is considering waiving the charge in their case, Sanchez said.


At this point it is difficult to tell which GPA customers have been misclassified, which have been charged more than the reasonable demand charge, and which are simply facing higher power costs.

Like many businesses on Guam, Sweet Escape in Hagåtña, a small ice cream shop in the Chamorro Village, saw an unexpected spike in its power bill.

The shop's bill is normally about $300 per month, but the bill from May climbed by about $50, said Mary-Ann Perez, who owns the shop and another in the Agana Shopping Center.

"Whatever the equipment we had before is still the same equipment we have now ... As a matter of fact, our freezer broke down (for about a week) so we (were) expecting our power bill to go down. But in fact it went up," Perez said.

The same is true nearby, at the Guam Fisherman's Co-Op, where air conditioners were broken in May, but power bills still went up.

The Co-op's bill costs normally about $5,000, but it suddenly climbed to $8,500, said Manny Duenas, co-op president.

It is unclear whether the co-op should pay the demand charge. If it does, the business will be facing a 10 percent power increase even after GPA fixes the billing error.

That is a lot to swallow in this troubled economy, Duenas said.

Raise prices

The co-op will try to absorb the cost, but as power bills continue to rise, it will eventually have to raise prices, he said. This is true of any local business struggling with increasing power prices, Duenas said.

"People really need to analyze GPA and what we are really paying for," Duenas said, adding later: "Imagine another company that pays $10,000 -- that's $1,000 more."

The sudden increase in power bills has prompted Sen. Tom Ada, chairman of the Legislature's committee on infrastructure, to call for a public briefing with GPA tomorrow.

More infrastructure

Ada said GPA introduced the demand charge to end a practice of "cross subsidizing." That means local residents had paid the power company at a rate similar to that of large businesses, such as hotels and supermarkets, although the businesses required more infrastructure, Ada said.

This is why utility officials decided to increase commercial power rates more than residential rates, he said. However, the change is a struggle for smaller businesses, which may not use much more power than a house but are still categorized as a commercial customer, Ada said.

"It was never (GPA's) intent to try and recoup their cost at the expense of some customer or customers not being able to maintain their operations," Ada said. "I feel assured that when we find them ... those handful of customers are really going to need to sit down with GPA... and find out how to mitigate this thing."

The misclassification errors and higher-than-normal demand charge should not have affected the power bills of most residents, Sanchez said.

Possible decrease

The errors come not long after GPA announced a possible decrease in bills. The PUC will soon consider restructuring a Guam Power Authority loan and lowering a fuel surcharge, which together could lower power bills by about 5 percent by October.

In the meantime, some residents are trying to figure out why their bills are higher.

The Pacific Daily News interviewed more than a dozen ratepayers yesterday. Most said they did not see an increase in their bills. But a few said they saw a spike.

Christina Cruz, who lives in a three-bedroom house with five people, said her bill nearly doubled this month. Her family only uses air conditioning at night.

Cruz visited GPA yesterday to set up a payment plan for her power bill. There isn't much she can do to reduce her power usage, she said.

"They said they raised the power, so I figured that's maybe why my bill went up to $150, but it's always been around $80. It never went over $100. It never even went to $90. My usage hasn't changed," Cruz said.

A sudden increase has also puzzled Vincent Perez, who said he now plans to read his power meter every morning and every night.

Vincent Perez is the husband of Mary-Ann Perez, owner of Sweet Escape, and he said the couple is struggling with power bills at home, too. For some reason, their power bill climbed from $300 to $524, he said.

The couple is hardly home, he said. They only run the air conditioner at night, he said.

"We even got to the point where we unplug almost everything," Vincent Perez said. "We unplug our cable box and our phone. We make it a point to go around and make sure the chargers are unplugged and everything. The only thing we don't unplug is our refrigerator."

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