By Gerardo R. Partido
Variety News Staff

THE new fuel contract with BP Singapore approved by the Consolidated Commission on Utilities for the Guam Power Authority will be favorable to the island’s ratepayers, GPA general manager Joaquin Flores said yesterday.
The contract with BP, which runs for three years, calls for the payment of $21 million annually that will cover shipping, handling and insurance payments for GPA’s fuel requirements.
The price of the fuel itself will vary day to day, according to Flores, depending on the spot price of fuel in the international market.
Currently, GPA is spending about $180 million a year for fuel but this is expected to climb even higher if the price of oil spikes up.
According to Flores, having a contract with BP has many advantages since the company is one of the biggest fuel suppliers in the world.
He said Guam is actually fortunate to secure a contract with BP because the island is a relatively small market. Because of this, GPA does not have too much leverage to deal with a big company like BP.
Being one of the biggest suppliers, Flores said BP can assure GPA of getting a regular supply of fuel because the company has huge stockpiles and oil concessions.
“We can be assured of a monthly supply that will not be disrupted. We can also be sure that we will be getting the right kind of fuel because being a big company, BP has the facilities to refine the kind of fuel we want,” Flores said.
The utility put detailed specifications in the bid to ensure that GPA would get not just the cheapest source of fuel but also the right kind of fuel for its generators—fuel that is less likely to be affected by sludge and doesn’t need too much maintenance.
Although the new contract with BP is $3 million higher, Flores said GPA can be assured of a fixed price for three years on the shipping, handling, and refining of fuel.
Flores also took exception to charges that the bidding was not properly conducted.
He said all parties were allowed to participate in the bidding, ask questions, and propose amendments.
In fact, Flores said GPA took it upon itself to seek out at least 13 vendors, which can provide for the utility’s fuel requirements.
Although the price of fuel has been going down, Flores said the new fuel contract may or may not affect the 11 percent increase in the Levelized Energy Adjustment Clause, or LEAC, that GPA is asking from the Public Utilities Commission.
The LEAC is a fuel surcharge tacked on power bills by GPA at six-month intervals. The current LEAC petition takes into account GPA’s projected fuel expenses for the next six months.