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Last updateSat, 21 Oct 2017 10am

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    Saturday, October 21, 2017-2:26:12A.M.

     

     

     

     

     

Discussion on Guam solid waste transition focuses on potential rate increase

HAGÅTÑA (The Guam Daily Post) — A potential rate increase that could come from the transfer of waste management services back to the local government was the main talking point during testimony for a bill intended to smoothen that transition process.

Bill 111-34 establishes guidelines for employment, rates and the acquisition of existing systems as well as debt upon transfer of operations to the Guam Solid Waste Authority from the receivership of Gershman, Brickner & Bratton Inc.

The transition is anticipated to take place by the end of December.

However, Bill 111 also mandates that a rate review take place 180 days after the transition. Vice Speaker Therese Terlaje said it appeared the review would see solid waste service rates rise.

“I’m guessing this review is going to bring the rates up. Is there anyway you foresee avoiding raising the rates?” Terlaje asked Andrew Gayle, the chairman of the GSWA board, who appeared to testify on Bill 111.

The federal receiver submitted a rate study in December indicating trash fee adjustments could reflect a 60 percent increase in the monthly fee for residential trash collection, from $30 to $50, after operations are transferred back to the local agency.

Commercial rates could rise from $171 to $250, a nearly 68 percent increase; the cost of drop-offs at transfer stations could increase from $7.50 or $15 now, depending on volume, to $12 or $24.

However, GBB also did not recommend trash fee increases, as the study determined that revenues were sufficient to sustain operations.

The projected rate increases are based on the assumption that GSWA would begin paying off debt service on a $200 million bond that was issued to construct Layon Landfill.

That bond is currently being paid off through Section 30 funds.

Gayle did not directly answer Terlaje’s question on whether rates would have to rise.

The GSWA board chairman did acknowledge the receiver’s recommendation against rate increases but noted it did not factor other obligations GSWA may have, such as debt service.

“The debt service is something that will have to be factored in and decided upon. As a government and a people, we have to decide that debt service has to be paid,” Gayle said.

The main reason for the review was to ensure there were legally bonafide rates at the point of transition from receivership, he added. Afterwards, GSWA would conduct its own study and determine if ratepayers would have to front the cost of the bond.

“There are some arguments that the rates in place today were proposed and established by the court and not by the normal method of a utility setting a rate,” Gayle said. “This legislation allows us to say we’re going to adopt the rates, and then we’re going to look at the rates, and then we’re going to do a rate study ... and then decide, do we want ratepayers to pay that debt service?”

Gayle also denied that the transfer of employees to GSWA or the transfer of contracts from the receiver would increase rates.