Guam Power Authority Approves New Power Plan Construction

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$358 million plant to comply with tougher emission standards

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Jan. 28, 2015) – The Guam Power Authority's governing board voted unanimously last night on a plan that commits GPA to build a new power plant by 2020 to meet tougher federal air emission standards.

GPA has until the end of the month to submit the plan -- with a specific time table to build the plant by 2020 -- to the U.S. Environmental Protection Agency, said Consolidated Commission on Utilities Chairman Joey Duenas.

GPA's plan, as presented to the public last October, carries an estimated price tag of about $358 million to build the plant, upgrade transmission lines from the new plant, buy land and build a diesel fuel pipeline.

To meet tougher federal emission standards, the plant would use a cleaner fuel, called ultra-low-sulfur diesel, which is more expensive than the residual fuel oil GPA is currently using.

GPA faces federal fines for pollution if it continues to use the cheaper but environmentally damaging residual fuel oil.

Duenas said the preferred location for the proposed combined cycle power plant, which will have three 60-megawatt generators, is the Harmon area, next to the northern wastewater treatment plant.

The proposed plant won't have high smokestacks and won't require a massive power plant structure, unlike what people see now at Cabras Island, Duenas said.

He said the three 60-megawatt combined cycle generators that are being proposed will use technology similar to that used in jet engines, so the plant won't be as large as the Cabras plant.

There are environmental and cost benefits of putting the new facility next to the wastewater treatment plant, Duenas said.

The plant will need 3 million gallons of water every day for cooling, so treated wastewater from the wastewater plant will be used, he said, helping to conserve Guam's drinking water supply.

Duenas, said the power from the new facility, "is not going to cost (customers) more than what they were paying ... a year ago, hopefully."

He said the price projections by GPA consultants took into account the recent drop in oil prices.

"They showed us, given today's oil prices, that these estimates ... are in the ballpark," Duenas said.

"This seems to be a good thing all the way around," he said. "We believe what we are planning to do works."

The cost of retrofitting old power plants to meet federal air emission standards would have carried a hefty price tag, said Simon Sanchez, a CCU commissioner.

GPA's plan to address new emission standards started in 2012, when Sanchez was chairman of the CCU.

GPA previously estimated the cost to retrofit old plants to meet the new standards would be more than $400 million.

It doesn't make sense to retrofit GPA's old power plants with new smokestack "scrubbers" that would outlast the old plants, which are several decades old, Sanchez said.

LNG option on hold

Last year, GPA gave a presentation that included the use of liquefied natural gas as a second fuel source for the proposed power plant in the Harmon cliffline area.

The LNG option would have carried a price tag of more than $500 million, GPA's plan, presented last October, states.

Guam doesn't have the seaport facility to offload and process LNG from ships for use at a power plant.

Duenas said the use of LNG wasn't included in the power plant plan that will be submitted to the U.S. EPA because it would take too long to make the changes necessary to use that fuel.

It would take eight to 12 years to build a plant and related infrastructure for LNG, and the U.S. EPA would never agree to that long of a timeline to come into compliance, Duenas said.

The utility agency has not decided how the new plant would be financed, but it has considered a few options, including borrowing from the bond market or inviting investors to submit bids to finance the construction and operation.

The CCU's approval moves the process to the Public Utilities Commission, which weighs the impact the plan will have on ratepayers.

The Legislature also will be part of the approval process, particularly if bond borrowing is required.

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