Why Are Power Rates For the New Solar Plant, Which Does Not Use Fuel Tied to Oil Prices?

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An aerial view of the Dan Dan Solar Farm.

Guam – Why are power rates for the new solar plant, which does not use fuel tied to oil prices? This is a question posed to the Guam Power Authority earlier this month. According to a CCU document, on November 12, the Public Utilities Commission administrative law judge wrote that the PUC is attempting to assess why energy production costs for the new NRG solar plant are included in the LEAC. This poses the question as to why renewable energy costs on Guam are measured by fuel costs when renewable energy does not use fuel? In a presentation titled, “NRG cost from LEAC to base rate,” GPA lays out the reasons why funding renewable energy should stay within the LEAC rate. According to GPA changing the LEAC funding mechanism could delay ongoing projects, including phase 3 of its renewable project with the Navy. According to the document, GPA says the PUC approved the recovery of renewable contracts back in December of 2011, which they did according to GPA docket 11-12. Furthermore, GPA says that it does not have the revenue to absorb the costs associated with changing how NRG is funded. GPA says the annual cost for renewables will increase over $9 million. But there is a precedent. Both GPA’s private power plants which burn fuel, MEC unit 8 and 9 and Temes CT, are not funded through the LEAC even though renewables are. Both units have energy conversion agreements. GPA says that those units provide a firm 24/7 capacity. GPA argues that the solar plant only provides supplemental energy and cannot be dispatched as needed to meet production shortfalls. GPA plans to submit their official positions t the Guam PUC on this matter by November 30.