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New 180 Megawatt Power Plant

Overview to

Guam Chamber of Commerce

September 27, 2017

John Benavente, PE General Manager

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Why  Build  a  New  180  MW  Plant?  

•  Exis9ng  Cabras  1&2  MW  baseload  plant  is  over  42  years  old.  Most  of  other  genera9ng  units  are  over  20  years  old.  

•  GPA’s  baseload  units  burn  residual  fuel  oil  and  are  non-­‐compliant  with  recent  USEPA  regula9ons.  

•  GPA  is  currently  subject  to  poten9ally  over  $150  million  in  penal9es  should  it  not  complete  its  compliance  plan  submiQed  to  USEPA.  

•  GPA  lacks  adequate  baseload  units  to  meet  future  demand.    It  is  becoming  more  difficult  to  keep  the  42  year  old  plant  running  un9l  2022.  

•  Exis9ng  baseload  units  do  not  work  well  with  intermiQent  renewables  such  as  solar  PV  and  wind.    GPA  an9cipates  contrac9ng  for  over  150  MW  of  renewables  over  the  next  five  years  as  a  hedge  against  increasing  fuel  cost.  

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New  Power  Plant  Characteris9cs

•  Future  power  plant  to  be  constructed  in  compliance  with  both  USEPA  and  GEPA  Regula9ons.      

•  Plant  will  meet  all  air,  water,  noise  and  other  regula9ons  in  order  to  be  permiQed  for  opera9ons.  

•  Plant  to  operate  on  Ultra  Low  Sulfur  Diesel  or  Natural  Gas  which  are  both  considered  by  USEPA  as  “clean  fuel”.  

•  New  technology  is  much  simpler  than  the  exis9ng  baseload  ones  which  would  result  in  higher  reliability  and  safer  opera9ons.  

•  Plant  to  be  substan9ally  more  efficient  than  the  exis9ng  units  resul9ng  in  reducing  GPA’s  annual  fuel  consump9on  by  over  11,000,000  gallons.  

•  Dual  fuel  capability  would  result  in  rela9vely  stable  rates  because  GPA  would  no  longer  be  only  9ed  in  to  the  very  unstable  fuel  oil  market.    

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For  Illustra9ve  Purposes  Only  

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For  Illustra9ve  Purposes  Only  

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Why  a  New  Plant  in  Ukudu? •  Elevated  from  poten9al  tsunami  and  storm  surges;  currently  all  baseload  units  

suscep9ble  to  these  credible  threats.  •  Close  to  the  Northern  District  Waste  Water  Treatment  Plant  (NDWWTP)  

allowing  use  of  grey  water  for  cooling  purposes  which  would  reduce  demand  on  the  aquifer  by  over  3  million  gallons  per  day.  

•  Close  to  Major  Substa9on  and  Load  Centers  thereby  improving  reliability  and  reducing  line  losses  (about  $3M/Year).    

•  Plant  to  directly  9e-­‐in  to  major  underground  transmission  lines  providing  for  poten9al  opera9ons  through  typhoons  and  for  quick  recoveries  ager  storms,  especially  in  Tumon.  

•  Topography  is  generally  flat  without  wetlands.  •  Most  public  right-­‐of-­‐ways  available  to  result  in  expedient  construc9on.    •  USEPA  to  assist  in  expedi9ng  Air  Permits  because  loca9on  is  acceptable.    The  

exis9ng  Cabras  Power  Plant  area  is  designated  a  non-­‐  aQainment  area  and  therefore  a  new  plant  there  would  require  substan9ally  more  9me  to  permit.  

•  Inadequate  land  area  at  Cabras  to  construct  plant  

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Current  Aerial  View  

NDWWTP  

Harmon  Substn  

8  New  180MW  Power  Plant  at  Ukudu  provides  substan;al  reliability  improvements    GPA  has  placed  vital  power  transmission  lines  underground  from  the  Harmon  Substa;on  to  key  load  centers  of  

Guam’s  economy    including  GMH,  GIAA,  Tumon  Bay,  Tamuning,  Harmon,  Dededo  and  AAFB).      

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GPA  will  not  be  able  to  meet  Demand  without  New  Power  Plant  by  2021 Summary  of  System  Genera/ng  Capacity  With  No  New  Baseload:   With  New    

180MW  Descrip/on   FY  2015   FY2017   FY2021   FY2021  Baseload  MW  Capacity   299   208   208   268  Emergency/Standby  Capacity   120   200   200   200  Total  MW  Capacity   419   408   408   468                      Peak  MW  Demand   249   263   283   283  Reserve  Margin   170   145   125   185  Total  Two  Largest  Units   132   120   120   88  Reserve  Less  Two  Largest  Units   38   25   5   97              %  Baseload  Capacity   71.4%   51.0%   51.0%   57.3%  

   %  Energy  from  Baseload   98.0%   80.0%   62.2%   72.6%  %  Energy  from  Renewables   0.0%   3.5%   26.4%   26.4%  %  Energy  from  Emergency/Peaker   2.0%   16.5%   11.4%   1.0%  

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Renewables  can  only  provide  25%  of  Guam’s  Energy  needs  by  CY2021.    Conven;onal  Energy  a  Must!

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Megaw

aVs  

130MW  Solar  PV;  65MWH  ESS  Conven9onal  Supply  Reduced  by  15MW  At  Peak  

ESS  

Solar  PV  

Conven9onal  

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Renewable  PorWolio  Standards  (RPS)    Achieved  by  2021

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Projected  Power  Related  Investments  Thru  2021

Descrip/on:   Amount   Investor   Agreement  Type  

Renewables,  Phase  II  –  HANWHA,  KEPCO   $350,000,000   Private  En99es   Power  Purchase  Agreement  

Renewables,  Phase  III  –  Navy  Land  Lease   $120,000,000   Private  En99es   Power  Purchase  Agreement  

New  180  MW  Power  Plant   $300,000,000   Private  En99es   Independent  Power  Producer  

New  180  MW  Power  Plant  Pipeline  &  Transmission   $100,000,000   GPA   Revenue/Other  Funds  

Natural  Gas  Infrastructure  (  When  Oil  >  $60/Bbl.)   $200,000,000   Private  En99es   Independent  Power  Producer  

Total:   $1,070,000,000  

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Targeted  CY  2022  Fuel  Cost  and  Barrels  Reduc;on  for    Various  Scenarios

July  2017  Fuel  Oil  Prices:    RFO  =  $55/Bbl.;  ULSD  =  $75/Bbl.  

Scenario:   Annual  Cost   Cost  Variance   Avg.  $/kWh   Total  BBLs.   BBL.  Variance  

Exis9ng  CY  2017  Units   $168,819,330       $0.105   2,640,096   0  

Addi/onal  150MW  Renewables   $157,383,401   -­‐$11,435,929   $0.098   1,938,433   -­‐701,663  

USEPA  Forced  Compliance   $197,519,886   $28,700,556   $0.123   2,034,689   -­‐605,407  

New  180MW  (ULSD)   $168,881,229   $61,899   $0.105   1,653,463   -­‐986,633  

New  180MW  (Natural  Gas)   $141,495,393   -­‐$27,323,937   $0.088   88,558   -­‐2,551,538  

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Will  the  New  Plant  Affect  Base  Rates?  

•  GPA  has  indicated  that  base  rates  would  stay  at  about  current  level  despite  the  new  power  plant  $400M  investment.  

•  Poten9al  Sources  of  Offsesng  Funds:  •  Cabras  3&4  Insurance  SeQlement  Proceeds  $80M  Plus  ???  •  Cabras  1&2  Re9rement  (Reduced  Cost  of  $10M/Year)  •  MEC  8&9  Turnover  to  GPA  (Reduced  Cost  of  $15M/Year)  •  TEMES  7  Turnover  to  GPA  (Reduced  Cost  $4M/Year)  •  Other  Cost  Saving  Ini9a9ves  (Company  Right  Sizing)  

•  Reduc9on  of  FTE  (dropped  about  35  FTE  in  past  three  years)  •  Over9me  Reduc9on  (dropped  from  $3.2  M  to  $1.4M  in  FY2017)  •  Refinancing  of  2010  Bonds  ($300K/year)  •  Demand  Side  Management  Programs  to  reduce  Peak  Demand  

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Summary •  GPA  urgently  needs  the  land  to  build  the  new  power  plant  which  

would  make  it  compliant  with  USEPA,  reduce  consump9on  of  fuel  oil,  meet  future  demand,  and  work  well  with  renewables  in  order  to  provide  a  sustainable  future  for  the  island.  

•  Failure  to  construct  and  commission  the  new  180MW  power  plant  will  hinder  GPA  from  mee9ng  future  power  demand  resul9ng  from  new  developments  including  military  buildup.  

•  GPA’s  plan  of  the  new  power  plant  burning  ULSD  and  Natural  Gas  coupled  with  renewables  will  minimize  upward  price  risks  associated  with  unstable  fuel  oil  markets  which  had  resulted  in  Guam’s  residen9al  energy  rate  rising  as  high  as  $0.29/kWh.    Plans  underway  would  very  likely  bring  rates  to  below  $0.20/kWh  as  it  was  in  January  2017  

•  GPA  plans  to  not  increase  base  rate  to  cover  cost  of  new  plant  •  Time  is  of  the  Essence  for  the  new  plant  

 Please  help  us  achieve  a  sustainable  energy  future.  

Si  Yu’os  Ma’åse’