Fuel surcharge cut approved but Guam utility officials expect erratic oil prices amid Middle East crisis

 By Pacific Island Times News Staff

With the escalating Middle East crisis predicted to cause volatility in the fuel prices, the Public Utilities Commission has approved a flat rate of 15 cents per kWh for the levelized energy adjustment clause, or LEAC, which is higher than the rate proposed by the Guam Power Authority.

The new rate, approved by the PUC on Wednesday, will take effect on Aug. 1 and run through Jan. 31.

The approved rate represents a decrease from the current 20 cents per kWh and is expected to generate an estimated savings of $53.32 for the average residential customer using 1,000 kWh per month, GPA said.

LEAC, also known as fuel surcharge, is a pass-through charge that fluctuates based on the price of oil and other fuel-related costs. It is adjusted periodically, typically every six months, to reflect changes in fuel costs.

In its petition, GPA sought to lower LEAC to 13-14 cents per kWh, reflecting reduced fuel consumption resulting from the integration of Ukudu and the planned retirement of aging generators, including Cabras 1 and 2, the baseload generator units.

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GPA said the commission's decision to set a single rate for the entire six-month period was based on several factors, including their consultant’s finding that a 

flat rate is consistent with the structure and purpose of the LEAC program, which is designed to stabilize energy costs over time.

The consultant also cited the risk of international fuel price volatility following recent conflicts in the Middle East as a reason to adopt a more conservative approach.

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"We respect the PUC’s role in reviewing every filing thoroughly and  ultimately making decisions they feel is in the best interest of ratepayers,” said John M. Benavente, general manager. “We will continue to monitor market trends and fuel costs closely, especially as the Ukudu Power Plant moves closer to commissioning.”

GPA said it will continue to monitor oil price trends and will reassess the LEAC rate should fuel costs drop significantly following the commissioning of the Ukudu Power Plant later this year.

The new plant is expected to reduce fuel use by over 900,000 barrels annually

 and is central to GPA’s long-term strategy for more reliable and affordable energy on a sustained basis.

GPA stated that the PUC’s decision impacts the broader strategy initially designed to mitigate the effects of the proposed base rate increase, which is intended to support the repayment of financing for the Ukudu Power Plant upon its commissioning.

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