Guam Power Authority Sales Decline With Renewable Generation

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GPA estimates $4.5 million revenue drop as schools install solar panels

By Louella Losinio

HAGÅTÑA, Guam (Marianas Variety Guam, June 5, 2014) – The Guam Power Authority has sought the assistance of the Public Utilities Commission in seeking solutions to its slowly declining sales, which GPA officials said could be further exacerbated by the implementation of P.L. 32-095 – the legislation which allows the Guam Department of Education to install renewable energy systems at the island’s public schools.

In a letter to PUC legal counsel Frederick Horecky, GPA General Manager Joaquin Flores reported that GPA consultant Black & Veatch LLP has estimated that the utility could lose more than $4.5 million in non-fuel revenues as a result of the implementation of P.L. 32-095.

According to GPA, for two out of the last three years, the agency has suffered losses greater than 3 percent per year, including a decline in fiscal year 2012 and another decline through March 31.

Flores stressed the importance of addressing the slowly declining sales, saying the loss has "increased significantly as a result of the passage of Public Law 32-095 which raised the net metering cap for vendors willing to install solar panels at school locations." P.L. 32-95, which was enacted into law in November 2013, allows GDOE to enter into a renewable energy power purchase agreement for all of its schools as well as administrative and ancillary buildings for a term of up to 25 years.

The renewable energy partnership is projected to generate millions in energy savings for GDOE.

[PIR editor’s note: Pacific Daily news reported that the "Consolidated Commission on Utilities members on Tuesday approved a 3.25 percent total bill increase in the Levelized Energy Adjustment Clause, or the fuel portion of residents' power bills, because of rising fuel costs."]

Not yet

GPA acknowledged that renewable energy is not yet a significant contributor to its power sales losses.

As of Sept. 30, 2013, GPA estimates that $278,025 in revenue had been lost as a result of net metering. This figure corresponds to only about one-sixth of 1 percent of GPA revenues.

According to a recent report from the Office of Public Accountability, GPA had a revenue decrease of $2.4 million in FY2012.

To stem the utility’s revenue losses, the Consolidated Commission on Utilities has approved a GPA resolution outlining the plan to open discussion with PUC on potential solutions. PUC is the entity responsible for establishing and monitoring power rates and other related fees.

Flores said the power authority is trying to mitigate any new increase within the next five years.

"This petition allows me to discuss solution alternatives to the PUC on how to best address the declining sales. This is quite a serious problem for us," he emphasized.

CCU Chairman Simon Sanchez said the resolution, through open discussion with PUC, seeks to identify the best rate structure and rate design appropriate for addressing GPA’s challenges.

"At the end of the day, the ratepayers own this company too. If GPA collapses, the ratepayers’ company collapses. We are a long way from a position where you don’t need a GPA," Sanchez said.

He added: "This is the most fundamental question that we need to answer: What is the best and most fair way to collect rates for the costs we incur from the energy we make to those we serve?"

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