By John O’Connor
For Variety
HAGÅTÑA (The Guam Daily Post) — With fuel prices still high due to the U.S.-Israel war with Iran and the closure of the Strait of Hormuz, the Guam Power Authority is proposing to raise the Levelized Energy Adjustment Clause by nearly 6 cents, from about 13.58 cents per kilowatt-hour currently to around 19.4 cents per kWh beginning in July and lasting through January.
The LEAC is the portion of a monthly power bill that largely pays for GPA’s fuel costs.
If approved, the proposed LEAC would raise the total monthly bill for the average residential customer by $58.31 when using 1,000 kilowatt-hours per month.
GPA is asking its governing board, the Consolidated Commission on Utilities, to authorize it to petition the Public Utilities Commission for the rate increase.
The PUC will make the final decision on whether to implement any rate adjustment.
Just a couple of months ago, GPA had recommended maintaining the current LEAC through the end of July even as fuel prices rose due to the Iran war.
But the utility’s fuel shipment costs have now ballooned to nearly $60 million, while the average cost before the war was $25 million. While costs may fall with the next shipment, they still appear to be much higher than the pre-war average, based on information GPA presented Thursday during a work session with the CCU.
GPA sources its fuel oil from Asia, which obtains crude oil from the Middle East, where tankers must pass through the Strait of Hormuz.
“The current LEAC period was implemented one year earlier. It was implemented in January instead of February. So we cut it to a (six-month) period. That’s why we’re looking at July. And furthermore, the other reason is we do need to start the recovery process,” GPA General Manager John Benavente said Thursday.
However, even if the LEAC increase is implemented, it won’t cover all of GPA’s costs. The utility’s underrecovery is projected to be $27 million by June 30, according to Benavente.
In order to fully recover costs, the LEAC would need to rise to about 23.1 cents per kWh, which would raise the total monthly bill for the average residential ratepayer by $95.43, according to GPA’s presentation Thursday.
The power utility has, in the past, stayed away from fully recovering costs in one step, opting instead to spread out rate increases or maintain rates at certain levels to mitigate rate hikes on consumers while recovering costs.
This time, GPA is pursuing a credit line that should help it do the same.
“The credit line will help us to pay … We’re requesting to hold the underrecovery projected for June at $27 (million) until January. Don’t even recover that. That way, if oil prices do come (down), it will naturally recover and that underrecovery will go down further,” Benavente said.
“If it does go up further, we have the credit line to help us pay, and we can still hold the LEAC this way and then make the adjustment…. Because right now, as we can see, nothing is certain about the war,” Benavente added.
The credit line was on the PUC’s agenda Thursday night.
Normally, the LEAC is set for six-month periods: from February through July and from August through January.
As Benavente said, the current LEAC period began in January, a month earlier than usual. This was because GPA wanted to coincide a LEAC reduction with a base rate increase to offset the latter.
The base rate hike is intended to pay for costs associated with the new Ukudu Power Plant, which was fully commissioned in December 2025 and has helped mitigate fuel cost increases for GPA because of its efficiency.
However, the base rate increase and LEAC reduction combined still led to an increase of about $8 on the total monthly bill for the average residential ratepayer.
Before the Iran war, Benavente said there was a possibility the LEAC could drop even further by August.
