RESIDENTS may see a 5 percent reduction in their monthly bills by the start of the next fiscal year.
During the Consolidated Commission on Utilities regular meeting on Tuesday, commissioners approved two proposals aimed at reducing power rates. However, the proposals will still be reviewed and ultimately decided on by the Public Utilities Commission.
Guam Power Authority spokesman Art Perez said the first proposal is to lower the Levelized Energy Adjustment Clause (LEAC) or fuel recovery surcharge.
“They gave PUC two options. PUC can either lower it for the full recovery amount or they can cut it in half,” Perez said. “During this past LEAC period there was a loss or under-recovery for fuel expenses. But with the price of oil dropping, it was an opportunity for us to adjust the rate and pass on these modest savings.”
The LEAC is a revenue neutral mechanism to recover fuel costs. Unlike gas stations, changes in GPA oil/fuel prices are only addressed twice a year, Feb. 1 and Aug. 1.
The other proposal is the refinancing or restructuring of GPA’s bond debt that goes back as far as the 1994 Bond Series.
The existing longterm debt would save about $8.9 million in debt payments for the next six years.
If approved, the proposal will roll back the recent May 1 increase in base rates that was approved by the PUC and save nearly $9 million for the 2010 bond.
“The refinancing and restructuring of our existing debt would effectively reverse the current rate increase,” GPA General Manager Joaquin Flores stated. “By saving almost $9 million in annual debt service payments for the next six years, GPA can pass back these savings and the recent base rate increase can be rolled back.”
The proposed restructuring of GPA debt will require approval by the Legislature, the governor and the PUC. “We are hopeful we all can work together to bring about these savings for ratepayers as soon as possible,” said Simon Sanchez, CCU chairman.
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