Guam Power AuthorityPresentation to the

Pacific Power Association14th Annual Conference & Trade Exhibition

August 26, 2005

From Independent Power Producers to Performance Management Contracts, Guam Power

Authority’s Long Road Towards Reliable Power

2

Team Members

Frank S. Blaz – GPA Manager of Generation

John J. Cruz, Jr., P.E. – GPA Manager, Strategic Planning & Operations Research

Jennifer G. Sablan – GPA Asst. Manager, Generation (Acting)

Arlene M. Aromin, P.E. – Special Projects Engineer, GPA Executive Office

3

Overview

Introduction History Performance Management- Concept Performance Management- Reality Performance Management- The Experience Conclusion

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Introduction

Pioneered Public-Private Partnerships on Guam

Independent Power Producers

Performance Management Contractors

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History

Challenges to address the ongoing emergency and urgent need for adequate and reliable power generation system in Guam Depletion of Personnel Resources Accelerated Load Growth beyond forecasts Increased Forced Outage Rate Load Shedding

GENERATION EXPANSION PROJECTS 1993 – Fast Track Diesel (App 93 Mw) 1992 / 1994 – Dededo Combustion Turbine (App 45 Mw) 1995 / 1996 – Cabras 3 & 4 (App 79 Mw)

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History- Privatization Phase I

1996 - GPA began emergency procurement for Independent Power Producers (IPP) & Performance Management Contractors (PMC)

Marianas Energy Company (MEC) Piti 8&9 - 88 MW Slow Speed Diesel (1999)

Taiwan Electrical and Mechanical Engineering Services (TEMES)

Piti #7 - 40 MW Combustion Turbine (1997)

Pruvient Energy Guam Inc. Tanguisson Power Plant - 53 MW Steam (1997)

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History- Privatization Phase I

IPP Responsibilities: Construction, operation and maintenance Performance Guarantees (Heat Rate & Availability)

PMC Responsibilities: Rehabilitation, operation and maintenance Management of GPA Employees Performance Guarantees (Heat Rate, Availability,

EFOR)

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PMC Conceptualization

Continued Improvement of GPA Operations Lockbox Accounts Further Privatization Efforts (PMC)

Public Utilities Commission strongly recommended the implementation of permanent PMC

Cabras Steam Power Plant Cabras Low Speed Diesels

Development of RFP for privatization of management of all GPA Baseload Plants.

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PMC - Reality

Financing Budgeting Compensation

Structure Staffing Training Operations

Maintenance Performance Improvement Projects Outsourcing Contract Terms Communication and Reporting

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PMC- Reality

Performance Management Contractors 2003 - Taiwan Electrical and Mechanical

Engineering Services (TEMES) Cabras 1&2 – 132MW Steam

2005 - Doosan Engine Cabras 3&4 – 88MW Slow Speed Diesel

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PMC – The Experience

Equivalent Availability Relative Heat Rate Staff Optimization Operations & Maintenance Spending Personnel Overtime Spending

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IPP / PMC – The Experience

Eye Candy…

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Cabras Power PlantsHistorical Vs. Post PMC Performance

Cabras 1&2 Equivalent Availability Factor

87.00%

82.06%

74.10%68.72%

63.34%

44.34%45.43%

67.03%

82.32%

39.24%

69.80%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

95 96 97 98 99 00 01 02 03 04 05

Fiscal/Contract Year

Post PMC

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Cabras Power PlantsHistorical Vs. Post PMC Performance

Cabras 3&4 Equivalent Availability Factor

95.59%

69.24%

13.57%

48.87%

63.95%

39.81%

82.17%88.58%

89.78%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

97 98 99 00 01 02 03 04 05

Fiscal/Contract Year

PMC

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MEC Power Plant Performance

MEC 8&9 Equivalent Availability Factor

94.0%94.2%

95.1%

92.1%91.7%

95.6%

89%

90%

91%

92%

93%

94%

95%

96%

1999 2000 2001 2002 2003 2004

Year

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Tanguisson Power Plant Performance

Tanguisson Unit 1&2 Equivalent Availability Factor

93.4% 95.6%

86.4% 86.8%

91.8%

89.6%

88.7%

77.2%

70%

80%

90%

100%

1 2 3 4 5 6 7 8

Contract Years (Sep '97 thru Jul '05)

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Cabras Power PlantsHistorical Vs. Post PMC Performance

Plant Relative Heat Rate(Based on Design)

113.63%

107.40%

108.66%

104%

105%

106%

107%

108%

109%

110%

111%

112%

113%

114%

115%

97/98 2004 2005

Performance Test Year

Post PMC

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Cabras Power PlantsHistorical Vs. Post PMC Performance

Cabras 1&2 Plant Efficiency

13.47

13.9913.92

13.83

13.20

13.30

13.40

13.50

13.60

13.70

13.80

13.90

14.00

14.10

2002 2003 2004 2005Year

(KW

H/G

al) Post PMC

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PMC - Conclusions

Significant Plant Performance Improvements Staffing Optimization Expedited completion of CIP/PIP (Procurement) Heat Rate, efficiency gains Reliability improvements Skills improvement of O&M Personnel Process efficiency enhancements Economic Dispatching

Results: $ Savings to GPA and its ratepayers

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Thank You!

Questions or Comments?