GPA expenditures outpace revenues
By Pacific Island Times News Staff
Guam Power Authority's total operating revenues decreased by 1.8 percent, or $6M, from $335.5 million in FY 2020 to $329.3M in FY 2021, according to the Office of Public Accountability's audit released today.
The revenue decrease resulted from under-recovery of fuel charges, and purchase of fuel in the amount of $15 million through the American Rescue Plan Act grant of 2021, OPA said.
The audit found that miscellaneous revenues increased by $3.1 million, from $3.1 million in FY 2020 to $6.2 million in FY 2021, due to a demand-side management fee charged to customers approved by the Public Utilities Commission in late May 2020.
OPA said total operating and maintenance expenses increased slightly by 1 percent, or $3.2 million, from $307.8 million in FY 2020 to $311 million in FY 2021.
"The increase was primarily due to increases in production fuel expense, other production expenses, administration and general expenses, and customer accounting expenses, which increased in aggregate by 2.33 percent, or $5.7 million," OPA said.
"Operating and maintenance expenses increased due to higher fuel cost in 2021. Station use increased from 65,487 megawatt hour (mWh) in 2020 to 67,030 mWh in 2021," the audit report said.
OPA said these increases were slightly offset by decreases in depreciation and amortization expense, energy conversion costs, and transmission and distribution expense, which decreased in aggregate by 4.06 percent, or $2.6 million. Transmission and distribution line loss decreased to 89,880 mWh in 2021 compared to 93,613 mWh in 2020.
In general, GPA closed FY 2021 with an increase in net position (net income) of $8.2 million from the prior year’s net position of $4.7 million, an increase of $3.5 million. This is mainly due to the $15 million American Rescue Plan Act grant GPA received in FY 2021.
Independent auditors Deloitte & Touche rendered an unmodified “clean” opinion on GPA’s financial statements and did not identify any material weaknesses or significant deficiencies in its compliance report.
"GPA is commended for being a low-risk auditee for the sixth year in row. D&T, however, issued a separate management letter that identified twelve comments." OPA said.
GPA has three bonds as of FY 2021 with a total debt service of $785.9 million for future maturities of long-term debts including:
1) 2012 Series Senior Revenue Bonds, with the initial face value of $340.6 million and interest at varying rates from 2.98 percent to 5 percent per annum payable semi-annually in October and April;
2) 2014 Series Senior Revenue Bonds, with an initial face value of $76.5 million and interest to varying rates from 4 to 5 percent per annum payable semi-annually in October and April; and
3) 2017 Series Revenue Bonds, with an initial face value of $148.7 million and interest at varying rates from 4 to 5 per annum payable semi-annually in October and April.
Although there were no material weaknesses or significant deficiencies in its compliance report, D&T issued a separate management letter that identified 10 deficiencies regarding GPA’s internal controls over financial reporting.
They are as follows:
1) billing customers on estimated consumption beyond the allowed three months;
2) allowance for doubtful accounts;
3) untimely recording of operating grant;
4) improper presentation of capital asset retirement transactions;
5) lack of policy and procedure regarding tampering chargers collections;
6) untimely updates to replacement of defective meter schedule;
7) ceased sending billing statements to customers with no current period charges;
8) inconsistent application of depreciation policy;
9) lack of rationale regarding the classification of certain expenses, and
10) and untimely review of nonmoving inventory for revaluation.