Guam – 3 members of the Consolidated Commission on Utilities were sworn in this morning [Tuesday], CCU Chairman Simon Sanchez, and Vice-Chairmens Benigno Palomo and Eloy Hara.
They were all re-elected after running un-opposed in the November election and will all serve another 4 year term in office.
Following the ceremony, Chairman Sanchez gave his State of the Utilities address, highlighting the achievements and challenges ahead for the island’s water and power systems.
Below is the text of CCU Chairman Simon Sanchez’s State of Utilities Address:
My fellow ratepayers. Thank you for attending today’s ceremonies to inaugurate the 5th CCU’s term of service to the community.
In November of 2002, our community elected the first CCU. The CCU was originally created as a by-product of a Legislative override of a Governor’s veto. There was some healthy speculation at the time as to how long the CCU might actually survive and no one knew whether an elected commission could improve our utilities any more than an appointed and confirmed board. The challenges our elected school board has faced also created doubt that another elected board would do any better.
Eight years and five elections later, I am proud to still be here today with my four other elected colleagues to continue to represent our people in insuring that essential utility services are available to serve the needs and ambitions of our community. The CCU has truly been a community based elected commission. It has attracted exceptional citizens to offer their public service in an arena that is not for the faint of heart.
Former Senator and long time public servant Benigno Palomo begins his third term on the CCU today. He has served with me since the inception of the CCU.
Current Senators Judy Guthertz and Tom Ada served on the CCU.
Long time educator and elected school board member Gloria Nelson, our current rose amongst the thorns, is half way through her 2ndterm.
Eloy Hara has come full circle as a former employee of GPA to now help both GPA and GWA improve. He brings years of varied public service as he begins today his second elected term on the CCU.
We have a former Rev and Tax director and successful business person in Joey Duenas, completing his first term. Other good people like Frank Shimizu, Vince Camacho and Margaret Blas brought their varied skills and experience in the private and public sector to the Commission.
These good people have been attracted to serve on the CCU and all have received the strong support of the community in the ballot box.
While the CCU could be removed or changed in the future by Guam law, it continues to remain as an effective elected commission accountable directly to the people. Its staying power, I believe, is attributable to the collective wisdom of the people of Guam and the selfless desire of good citizens to find a way to help Guam be even better. I know I speak for all ten citizens that have served on the CCU when I say that we all have been honored to represent our community.
Eight years ago, we took over the reins of GPA and GWA in the midst of a massive recovery effort from the ravages of Typhoon Pongsonga. By candlelight, we hired John Benavente for GPA and David Craddick for GWA. To add even more fun, the USEPA sued GWA for threatening public health just a week prior to our first inauguration.
Most of our island had no power and water service was still sporadic when we were first sworn in by Justice Carbullido eight years ago. (Justice: I’m glad that 8 yrs later, you’re still here and we’re still here).
Working together with our great employees, both utilities began to restore service and reached 99% restoration within the first 60 days of the year.
Within 6 months, we had successfully negotiated a Stipulated Order with the federal court and USEPA which provided the framework to restoring GWA to a viable utility.
Both GPA and GWA have come a long way since those early days of 2003.
Since 2003, GPA has saved ratepayers over $200 million in additional fuel charges by restoring the use of our most efficient base load generators to provide 98% of our power needs, up from 80% prior to the CCU.
GPA has led the way in effective use of public-private partnerships to improve power generation while also lowering costs to our ratepayers. The days of “load shedding” blues are now a distant memory for us.
GPA has improved the performance of our generation system so much that it will remain the sole provider of power for the pending Guam buildup. The US military has agreed that the best solution to meeting their expanding power needs is to remain a customer of GPA along with the rest of us.
The global oil crisis has forced us to reassess how we generate power. This year, GPA plans to issue RFP’s to obtain up to 80 MW for alternative energy solutions to diversify the ways we make power. Wind, solar, geothermal, co-generation, liquid natural gas and other technologies are now being pursued to reduce our reliance on oil and to make power generation more responsible to protect our island air quality.
Today, almost 50% of GPA’s load has now been protected by placing critical transmission lines underground. Today, our hospital, airport and tourism
center can remain on-line during typhoons, freeing up GPA resources to speed up recovery to the rest of our island. This year, GPA launches its new “Smart Grid” technology to allow our system to better engage alternative energy while also providing ratepayers a greater ability to monitor and reduce their power needs and consumption.
Also gone are the days where the government of Guam got better treatment than the people of Guam when it came to paying its power bills. From a high of almost $45 million in GovGuam receivables in 2004, GPA has reduced its receivable to less than $12 million today.
GMH paid off its bill in 2006 and a ten year old street light bill was paid in 2008. This year, GWA will pay off its ten year old debt and DOE will pay off their debt in 2013, all with interest payments to offset ratepayers’ cost of borrowing. GPA has restored the trust of the global financial markets, regaining its investment grade rating this year and thereby lowering the cost of future loans for our ratepayers. For the first time in over a decade, GPA
returned to the financial markets to borrow $200 million to invest in system upgrades (as opposed to just refinancings).
And for those eager to pay their power bills and perhaps increase their accumulation of “One Pass” miles, you can now pay your power bill on-line.
GWA has also gone through a transformation since 2003. Prior to 2003, GWA had lost over $50 million as an autonomous agency. It received a 100% rate increase in 1998 but built nothing new and still lost ratepayer money. Things got so bad the USEPA threatened to seek receivership when it sued in December 2002. We were at risk of losing control of our most priceless water resources to someone else. And no one would lend GWA money to fix things.
Today, GWA remains firmly in control of our water resources and has made the difficult but necessary decisions to keep our water in control of our people. GWA now supplies our people with water quality that meets federal clean water standards. In 2005, the system improvements were so dramatic that USEPA acknowledged that Guam’s water was the cleanest and safest ever. Gone are the days of boil-water notices that lasted months for large parts of our island. In the last four years, there have only been a handful of isolated boil-water notices that lasted no more than a couple of days.
By 2005, GWA was able to borrow its first $100 million and this year GWA borrowed another $118 million to improve our infrastructure. The financial markets have renewed their confidence in GWA’s ability to manage ratepayer monies wisely.
With these monies, GWA has reduced its sewage overflows by over 80%. Two new outfalls now take our treated waste water further away and deeper, without leaking in the immediate vicinity of our island beaches.
The Hagatna wastewater treatment plant received a $10 million upgrade that has put it on the doorstep of full compliance with federal and local standards. Our Ugum Water treatment Plant has been upgraded for $8 million and now supplies cleaner and safer water more reliably to our southern residents.
All our water wells have working stand-by generators for emergency use. 90% of the 56 items on the original 2003 Stipulated Order have now been completed and with this year’s borrowings, GWA has the monies to complete the remaining 6 items. GWA and USEPA are nownegotiating a new agreement to replace the 2003 Stipulated order and focus us on reaching full compliance with all applicable federal and local laws.
GWA also has used public-private partnerships well, hiring Veolia to help us improve service. This year GWA will complete the payoff of $22 million
worth of unpaid water and power bills inherited from the pre-CCU days. The ratepayer surcharges for these payments can now be eliminated or used to meet other needs without further increasing water rates.
GWA now has over 100 certified operators working our system, up from fewer than ten in the pre-ccu days. We also have five professional engineers working for us today. Before the CCU, GWA was lucky if it had one professional engineer. This is a tribute to the talent and hard work of our GWA employees and our ability to attract more professionals to serve our people.
While much has been accomplished at both GPA and GWA, it has not been all sunshine and plumerias, and much remains to be done.
Our recent island wide power outage shows that our system is still susceptible to failure. This morning, when I woke up to finish this address, I had to wait for power to come back on from an early morning outage.
Our power and water bills are much higher than they were in before the CCU. The higher rates have been difficult to propose but necessary to avoid the kinds of system collapse we see in other communities. Oil prices have more than tripled since 2002 but we have managed to have enough money to pay for the oil our community needs for the power it uses. Higher water bills are helping to pay for the improvements just discussed while keeping costs for the average user lower than the cost of a cable TV or cellular bill.
But we still have parts of our community with poor water pressure and limited wastewater access. We have hundreds of miles of leaking water lines to repair and replace. Over $50 million is needed to replace or build new sewer lines. Our largest wastewater plant in the north needs over $60 million to improve treatment and increase capacity for the fastest growing part of our island. Our water storage tanks will need at least $30 million in investments to improve water pressure and maintain clean water quality.
And improving customer service remains a critical need for both utilities.
There is no rest for the weary in the utility business. As we look forward, perhaps the most compelling achievement and challenge for both GWA and GPA has been the successful negotiations with the federal government to invest $1.5 billion into our water, wastewater and power system in order to meet the Guam buildup needs. The federal government has gone on record to identify Japan as the source of $420 million for GWA and $160 million for GPA to upgrade our systems which will be repaid 100% by the Department of Defense. Later this month, we will enter into our first discussions with the US and Japan governments on the terms of this assistance to ensure that the federal government keeps its word.
We will also work with our new Governors and Senators and other elected officials to insure the remaining $900 million will be made available to improve services for all Guam residents, whether they are citizen patriots or active duty. We echo the call made by Governor Calvo and Speaker Won Pat yesterday for a unified effort of cooperation and collaboration to insure that all of Guam is made even better.
In closing, I want to thank all of our GWA and GPA employees and their families. All of the achievements of the past eight years would never have happened without the talent and hard work of our employees and the unending support of their families. I am proud to note that all of the accomplishments of the past eight years have occurred with 300 fewer employees at both GWA and GPA. We are getting more service with fewer people and dedicating more ratepayer monies to fixing things instead of inflating payroll.
I also want to thank our private partners who have brought their skills and resources to team with our utility professionals. We have learned that when you give our utility co-workers training, management and resources, they can bring about great change and better value to our community.
I also want to thank all our elected leaders and public servants who have contributed their support and constructive criticism to help us become better.
As I enter my third and final term on the CCU, I want to thank all my colleagues that have served on the CCU.
Their commitment to exceptional public service, their collective wisdom and their tolerance of their long winded Chairman reminds me every day of why our people are served best when elected leaders work together.
Finally, I want to thank the ratepayers of Guam for their patience, understanding and demands that we make their lives better by improving the way they receive these essential public services. GPA and GWA are public utilities owned by the people of Guam. All of us at the CCU, GPA and GWA work for our ratepayers and their families, not the other way around.
Today, the CCU and our utility co-workers renew our commitment to serve the people of Guam to the best of our abilities. Our future is exceedingly bright. Our natural resources are in good hands.
Dangkulo na Si Yu’us Ma’ase. Yan Si Yu’us in fan benendisi taotao Guahan.