By Mar-Vic Cagurangan
While the Guam Power Authority is proposing a 20.3 percent reduction in fuel recovery charge effective next year, ratepayers may expect an increase in base rate to help cover the cost of a power project being built by a private company.
GPA said the drop in fuel recovery charge— also known as levelized energy
adjustment clause or LEAC— will be implemented from Feb. 1, 2025, through July 31, 2025.
LEAC rate will fall from 26 cents to 20 cents per kilowatt-hour.
“For the average residential customer using 1,000 kWh per month, this adjustment would result in a 14.8 percent reduction in their total monthly electric bill, saving approximately $53.19,” GPA said in a press release.
Simon Sanchez, commissioner of the Consolidated Commission on Utilities, noted that “besides the cost of fuel, there's the base rate that hasn't changed since 2013.”
“It's like 9.5 cents a kilowatt hour. That will go up a little bit,” Sanchez said Friday at the Industry Forum organized by SAME Guam Post.
The commissioner said the base rate hike will help pay the costs of the 175MW combined cycle Ukudu power plant being constructed by Korea Electric Power Corp.
“But the fuel savings will more than pay for that and reduce the power bill,” Sanchez added.
The Ukudu power plant is scheduled to be completed and switched on by September 2025. Its operations are projected to cut fuel exports by 40 percent, Sanchez said.
“The more efficient plant will require less fuel. That's going to lower your power bill. This is another way to look at the cost of fuel,” Sanchez said. “Most importantly, it will decrease fuel oil imports by 880,000 barrels a year.”
Guam currently imports about 3 million barrels of fuel a year.
“We are currently spending $116.30 a barrel as of last month's shipment for the ultra-low sulfur fuel that we bring in, which is most of the fuel,” Sanchez said.
“As long as oil remains kind to us, as it appears to continue to be, the LEAC will begin to significantly drop starting next February, and then again, in August,” he added.
He said Guam's two solar farms — one in Dandan and another in Mangilao — have enabled GPA to cut its fuel consumption.
“We used to burn fuels that were 2 percent to 3 percent. Now we're down to 0.2 percent. And it’s very clean,” Sanchez added.
GPA said its under-recovery balance is expected to reach a more manageable
level of $4.3 million, “following efforts to shield customers from abrupt rate
increases during previous periods of high fuel prices.”
“The adjustment reflects a decline in projected fuel costs, which GPA estimates to average $100.01 per barrel during the period,' GPA said.
CCU will hear GPA’s petition for LEAC cut during its regular meeting on Nov. 26. The recommendation will be forwarded to the Public Utilities Commission for final review and approval.
"We know that energy costs have been weighing heavily on our customers, and this proposed decrease is a step toward easing that burden," said John M. Benavente, GPA general manager.
"While the cost of fuel remains unpredictable, we’ve worked hard to stabilize rates and reduce impacts on families and businesses. Every decision we make is based on our goal to deliver reliable power at the lowest cost possible on a sustained basis," he added
Sen. Will Parkinson expressed support for GPA’s recommendation.
"The affordability of essential utilities is critical to the well-being of our community," Parkinson said. "Lowering the LEAC rate not only eases the financial strain on our citizens but also stimulates our local economy by increasing disposable income for families and small businesses."
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