Solar farm closure may lead to power rate increase in the long term

GPA meter (PNC file photo)

The closure of the Korea Electric Power Company (KEPCO) solar farm project could significantly harm the island’s ratepayers in the long term, the Guam Power Authority.

The Department of Public Works had issued a “stop work” order against KEPCO on the heels of a notice of violation issued by Guam Environmental Protection Agency after the Korean contractor caused environmental damage to the Marbo Cave area.

According to GPA general manager John Benavente, the power utility expects to save $17.9 million in fuel costs during the first year of the solar farm’s operation.

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For the first 4-year operating period of the solar farm, Benavente said ratepayers can save up to $49 million in fuel surcharges.

Benavente said the prolonged work delays caused by the stop-work order and notices of violation may result in the cancellation of the project, resulting in the loss of those projected savings.

“Extended delays of the solar plant commissioning would deny ratepayers $50,000 per day of LEAC (levelized energy adjustment clause) savings, thus improving the potential for a higher LEAC recommendation in February 2022,” Benavente said during Tuesday’s Consolidated Commission on Utilities meeting.

Moreover, Benavente said the 60MW utility-scale solar PV plant is named as a key project arising from the USEPA-GPA Consent Decree and ratepayers may be subject to penalties for not completing this project or meeting GPA’s renewable energy portfolio.

The utility-scale solar PV plant is an integral part of GPA’s renewable program to achieve 25 percent renewable energy by 2024 and 50 percent by 2030.

“Ratepayers have a significant stake in seeing this solar plant being successfully completed as early as possible,” Benavente said.

CCU commissioner Simon Sanchez said his fear is that the contractors may just throw up their hands and walk away from the project.

“That’s also a business decision … but they’re also being sued by some very capable parties. That adds to the $200 million cost of the project plus whatever penalties GovGuam may issue. And we have no control over what private citizens might sue for in terms of their cure. And so it just creates great uncertainty for all of us who ultimately are stuck either with KEPCO staying in or not,” Sanchez said.

For his part, CCU chairman Joey Duenas said KEPCO and Samsung are not small companies and they are big companies that have a lot of resources.

“They invested quite a bit of money into this project. I don’t see them making a business decision of walking away. I really don’t. So I am very positive. We all want them to do all the work to mitigate the environmental damage. We want them to do the work to go and clean up the damage that was caused … but we also want them to be allowed to continue to work on the project,” Duenas said.

He added that CCU and GPA plan to send a letter to DPW containing this message.