“Guam’s ratepayers will soon see lower
overall energy costs and increased reliability through the new Ukudu power
plant,” stated Joseph T. Duenas, Chairman.
“The 2022 plant commissioning is a key milestone in the island’s
Integrated Resource Plan, paving the way for cleaner, greener, and more affordable
energy.”
The Consolidated Commission on
Utilities approved the Guam Power Authority’s recommendation to approve an
Energy Conversion Agreement contracting Korea Electric Power Company (KEPCO) to
finance, build and operate a 198-megawatt combined cycle power plant in Ukudu,
Dededo. Ownership and operation of the plant will transfer to GPA at the end of
the 25-year contract.
The new dual-fuel power plant will
produce power efficiently using clean ultra-low sulfur diesel (ULSD) or
liquefied natural gas, substantially reducing GPA’s current fuel oil
consumption by about 35 million gallons per year. The savings will reduce the
fuel surcharge, thus lowering the cost of energy for ratepayers.
The new dual
fuel power plant is projected to lower the total average residential power bill
by 7.95%, while burning ULSD, once completed in 2023. All other rate classes
would also benefit from similar reductions in their power bill and if GPA is
permitted to use LNG instead of ULSD as a fuel source, average residential
power bills are projected to be lower by 21.15%, with similar savings for all
other rate classes.
“These
potential savings are not attainable unless GPA is first allowed to enter into
an ECA with KEPCO,” stated CCU Commissioner Simon A. Sanchez, “KEPCO is a
company whose total assets are in the billions of dollars – they know
the generation industry very well.”
“With this
ECA, all the risks are born by the contractor,” mentioned CCU Commissioner
Michael Limtiaco, “This ECA protects the ratepayer via the liquidated damages
within the bid guarantee under the performance bond and requirement of the
contractor to maintain a 20 percent equity stake in the plant.”
“The Authority has had extensive
experience with ECA’s and Power Purchase agreements over the past two decades,”
remarked Duenas , “GPA’s success with such partnerships to provide needed power
is reflected with their dealings with such companies as Taiwan Electrical &
Mechanical Electrical Services (TEMES) for Cabras 1 & 2, Pruvient Energy with
Tanguission Power Plant, Marianas Energy Corporation with MEC Units 8 & 9
and Aggreko for the units at Yigo.”
New technology, in-plant battery
energy storage systems, and redundant generators address current renewable
energy compatibility and intermittency challenges, allowing greater expansion
of the residential and utility-scale photovoltaic and other renewable energy
programs. The mandated 96% availability rate and location close to major load
centers will greatly improve reliability and the system’s ability to provide
uninterrupted power service, as well as support future demand.
“The key benefits of the Ukudu power plant are
greater affordability and reliability; modern technology that improves
renewable energy integration; and protection of the environment. This plant
will strengthen the island’s electric infrastructure and deliver a high level
of service to our customers,” said GPA General Manager, John M. Benavente, P.E.
“The new power plant will not only deliver higher reliability and
more renewable energy integration, it will help support Guam’s economic growth,”
stated CCU Commissioner Dr. Judith T. Guthertz, “The growth of the military and
an increasing population will need consistent energy to maintain load growth
and our island quality of life.”
The new Ukudu plant will replace the
45-year old Cabras 1 & 2 baseload units, whose degraded efficiency and
reliability cannot address modern intermittency issues or support additional
demand. Piti units 8 & 9, operated
by Marianas Energy Corporation, will be retrofitted to accept ULSD, eliminating
GPA’s use of heavy residual fuel oil.
The fuel conversion and decommissioning plans are crucial points of
GPA’s proposed compliance schedule with USEPA.
Grey wastewater from the Northern
District Wastewater Treatment Plant will be used as cooling water, diverting
daily ocean discharge of up to three (3) million gallons of treated sewer
water. Total emissions from the current baseload plants will significantly
decrease with planned baseload retirements and fuel conversion. The new plant emission
technology will meet or exceed USEPA Clean Air Standards, further shrinking the
total power generation carbon footprint.
“The new power plant will fully comply with
local and federal environmental regulations. This certainly is a relief from
the original alternative of complying with USEPA regulations by retrofitting
existing power plants, which would have resulted in substantial rate increases
without improvements to the system’s reliability, efficiency or ability to meet
future demand,” noted Duenas. “This plant gives ratepayers reliable,
responsible power at the lowest cost possible.”
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