By Pacific Island Times News Staff
The Guam Power Authority is seeking to refinance its existing 2014 Series A revenue bond in a bid to reduce its debt service by taking advantage of the currently low interest rates and dynamic market conditions.
“Recent improvements have positioned GPA to achieve a potential net present value savings of $3.3 million at an interest rate of 4.38 percent. This refinancing could result in an annual debt service payment reduction of approximately $266,000,” GPA said in a press release.
Taking a cue from a newly signed law that sanctions the debt-refinancing plan, GPA will present a resolution, which will be on the Consolidated Commission on Utilities’ agenda for its work session on Thursday.
The refinancing was authorized by Bill 262-37, now Public Law 37-95, which was authored by Sen. William Parkinson.
“The bill includes reasonable conditions and confirms the involvement of the Consolidated Commission on Utilities, the Guam Public Utilities Commission, the Guam Economic Development Authority and this administration to ensure any bond issuance makes sense for the people of Guam and results in savings for Guam ratepayers,” Gov. Lou Leon Guerrero said in her transmittal letter to the legislature on May 8.
Local investors will also be able to partake in the bond sale. The new law mandates the Guam Economic Development Authority to also offer a portion of any bonds for sale on Guam as well as in other jurisdictions, provided that the local sales would not increase the cost of issuing and repaying such bonds
“We urge the CCU to expedite this effort to take advantage of the current favorable market conditions in order to realize savings to our debt service that could be used for capital improvement projects," said John Benavente, GPA general manager.
Ongoing projects include the development of microgrids and the purchase of batteries to store and/or shift solar power for peak-hour consumption.
GPA said the refinancing initiative is expected to enhance its operational capabilities without increasing revenues.
“Despite the inflationary pressures evident in the high costs of fuel and
shipping and reflected in the levelized energy adjustment clause (or fuel surcharge), GPA has successfully maintained its base rate since 2013 through strong fiscal policies and efficiency improvements within the agency,” GPA said.
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