KEPCO’s power project revision leads to $4M bump in annual contract cost
By Pacific Island Times News Staff
The Guam Power Authority’s revised contract with Korea Electric Power Corp. or KEPCO, which entailed splitting a major power project into two, will bloat the contract cost by $4 million annually, according to Sen. Clynt Ridgell on Tuesday
Ridgell asked Attorney General Leevin Camacho and Public Auditor Benjamin Cruz to look into the multibillion-dollar contract, which originally provided for the construction of a 198-megawatt power plant at Ukudu near the Two Lover’s Point area.
The contract has been both delayed and significantly changed due to the company’s inability to get the environmental permits necessary for its full construction at the Ukudu site.
Specifically, KEPCO was unable to obtain a major source permit for the Ukudu site from the U.S. Environmental Protection Agency.
The USEPA’s website defines a major source as a “stationary source or group of stationary sources that emit or have the potential to emit 10 tons per year or more of a hazardous air pollutant or 25 tons per year or more of a combination of hazardous air pollutants.’
GPA, the Consolidated Commission on Utilities and Public Utilities Commission then opted to split the project up and construct part of the massive power plant at Cabras to allow them to apply for minor source permits.
They are proposing to keep most of the power plant at Ukudu while building a 41-megawatt power plant down at Cabras all under the same contract. This will result in an increase to the costs of the contract by a little more than $4 million annually.
This is a major departure from both the scope of work and cost of the original contract.
Ridgell said his office has received inquiries as to the appropriateness of this change, and whether the new plan to locate 41MW at Cabras should have been subject to a separate procurement action or if the entire contract for the Ukudu power plant should be subject to new procurement action.
Further, because of the inability to obtain this major source permit, the Ukudu Power project has been delayed with a new date of completion being November 2023 and commissioning no later than April 2024.
Once operational, GPA will purchase power from the plant’s operator for a period of 25 years. This means that if the plant is commissioned in 2024 the contract will last until 2049, a full four years after the requirement for 100 percent renewable energy.
P.L. 35-46, which Ridgell co-sponsored, requires that 100 percent of net electricity sales come from renewable energy by Dec. 31, 2045. This new commissioning date and the ensuing twenty-five-year contract period, ending approximately in 2049, implies that the contract could be in direct conflict with P.L. 35-46.
Ridgell asked the attorney general whether or not this is, in fact, a conflict and whether or not this could render the contract null and void.
It is also concerning that this contract for the Ukudu plant that is now being modified and extended was awarded to KEPCO, which is essentially the same company that was sued for the explosion of the Cabras power plant in August of 2015.
KEPCO is also the same company that is now being sued for the environmental damage caused to the Marbo cave area from the Mangilao solar plant project.