CCU defends contract approval, says new power plant is safe, affordable and reliable

Photo shows an artist's rendition of the planned new GPA power plant that is capable of using both ultra sulphur fuel and the cheaper liquefied natural gas, or LNG.

The Consolidated Commission on Utilities has defended its approval of the contract for the Guam Power Authority’s proposed new Ukudu power plant.

Senator Clynt Ridgell has been pushing for the rejection of GPA’s contract, saying the contract has been awarded to the company that was in charge of the Cabras 4 power plant when it exploded.

But according to GPA and the CCU, the proposed 198-megawatt combined cycle power plant plant is safe, affordable, reliable, and environmentally responsible.

“Guam’s ratepayers will soon see lower overall energy costs and increased reliability
through the new Ukudu power plant,” stated CCU chairman Joseph T. Duenas in a release. “The 2022 plant commissioning is a key milestone in the island’s Integrated Resource Plan, paving the way for cleaner, greener, and more affordable energy.”

The CCU approved GPA’s recommendation to approve an energy conversion agreement ECA), contracting Korea Electric Power Company (KEPCO) to finance, build and operate a 198-megawatt combined cycle power plant in Ukudu, Dededo. Ownership and operation of the plant will transfer to GPA at the end of the 25-year contract.

According to GPA, the new dual-fuel power plant will produce power efficiently using clean ultra-low sulfur diesel (ULSD) or liquefied natural gas, substantially reducing GPA’s current fuel oil consumption by about 35 million gallons per year. The savings will reduce the fuel surcharge, thus lowering the cost of energy for ratepayers.

The new dual fuel power plant is also projected to lower the total average residential power bill by 7.95%, while burning ULSD, once completed in 2023. All other rate classes would also benefit from similar reductions in their power bill and if GPA is permitted to use LNG instead of ULSD as a fuel source, average residential power bills are projected to be lower by 21.15%, with similar savings for all other rate classes.

“These potential savings are not attainable unless GPA is first allowed to enter into an ECA with KEPCO,” stated CCU Commissioner Simon A. Sanchez, “KEPCO is a company whose total assets are worth over half a billion dollars – they know the generation industry very well.”

CCU Commissioner Michael Limtiaco also pointed out that with the ECA, all the risks are born by the contractor. “This ECA protects the ratepayer via the liquidated damages within the bid guarantee under the performance bond and requirement of the contractor to maintain a 20 percent equity stake in the plant,” Limtiaco said.