Guam Power Authority’s LNG Proposal Partly Approved

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Guam Power Authority’s LNG Proposal Partly Approved PUC doesn’t feel consulting should be funded with LEAC money

By Michelle Conerly

HAGÅTÑA, Guam (Pacific Daily News, Jan. 2, 2014) – The Public Utilities Commission (PUC) Tuesday refused to approve the full cost of the Guam Power Authority's (GPA) multimillion-dollar consulting contract to implement liquefied natural gas.

The power company could not justify funding about $1.86 million in services through the fuel recovery surcharge reflected on monthly power bills, according to commissioners, and must return with an alternative funding source for this portion of the project.

Fred Horecky, PUC legal counsel, said commissioners, knowing GPA had to get going on the LNG implementation plan, approved all costs they felt were somehow related to the Levelized Energy Adjustment Clause (LEAC), which amounted to $2,045,000.

These included the integrated resource plan, how and when to retire older plants, if and when to build new ones, time deadlines, etc.

"We didn't really fully buy that rationale," Horecky said. "The PUC doesn't think (the project management office contract) should be funded through the LEAC."

By his calculations, five consultants working for the power company would be paid about $236 an hour working eight hours a day every day of the year to amount to the cost laid out in the $3.9 million contract.

Horecky said those numbers raised a red flag with commissioners who asked GPA to come back in 45 days with more information and a different funding source.

"The PUC has become more concerned that the utilities spend huge amounts on consultant contracts, and the PUC wants to make sure it's justified," he said.

Horecky noted that if commissioners approved the full amount of the contract, it would set a precedent for GPA and other utilities to utilize the option of passing unique costs on to ratepayers.

In February, $1,022,500 will be made available to the power company for the following six months. The Guam Power Authority can then petition for another $1,022,500 to continue the implementation plan.

Future projects related to the LNG implementation plan will not be funded through the LEAC, said Horecky who noted that the costs approved on Tuesday are applicable only for fiscal year 2014.

Representatives from the Guam Power Authority could not be reached for comment.

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