HAGÅTÑA (The Guam Daily Post) — The Public Utilities Commission is scheduled to tackle rates charged to customers of the Guam Waterworks Authority late next month, as the fiscal year comes to a close. This will be a true-up, or review, of the fiscal 2024 rate increase approved back in September 2022. The PUC authorized a non-lifeline rate increase of 5.5% for fiscal 2023, as well as a 5.5% increase for fiscal 2024 – subject to the true-up.
The 5.5% rate increase wasn’t what GWA wanted for fiscal year 2023, and there were concerns that another 5.5% rate hike for fiscal 2024 wouldn’t be enough to meet its needs. After running through the numbers, the utility is now seeking a much more significant rate hike of 27% for next fiscal year, for basic, lifeline and non-lifeline rates across all rate structure and customer classes, as well as a legislative surcharge increase from 3.5% to 3.8%.
Residential customers using 3,000 gallons per month pay about $63 currently for both water and sewer services, according to a GWA impact breakdown. If the GWA’s proposed increase is adopted, the bill would go up to about $81.
According to Post files, GWA General Manager Miguel Bordallo has said that more consumers likely fall in the 6,000 gallons-per-month range, which would mean their monthly bills would increase from about $82 to about $105 with the 27% rate hike.
Since the PUC authorized the rate increases at the end of fiscal 2022, there have been inflationary pressures, Bordallo has said. GWA has had to use more of its rate stabilization fund than anticipated, and coupled with that were increases in power costs. While the proposed rate hike is significant, it is only to get GWA up to its minimum debt service coverage, with some left over to re-establish reserves, according to Bordallo.
5-year plan
These rate increases are part of GWA’s current five-year plan, which is a series of capital improvement and financial plans laid out in five-year intervals as part of larger plans for system improvement.
The first of the rate increases for the current five-year plan were authorized in 2020, when the PUC adopted a stipulation between GWA and PUC consultant Georgetown Consulting Group. This included a 5% non-lifeline rate hike beginning in March of fiscal 2020 and a 5% hike beginning in fiscal 2021.
GWA needed to complete a set of studies before rate increases in fiscal years 2022 through 2024 could be updated. While the studies were completed, a rate increase for fiscal 2022 never materialized, as GWA and Georgetown differed on rate proposals and the process exhausted the entire year. This delay also resulted in a reduction of Coronavirus State and Local Fiscal Recovery Funds set aside to mitigate GWA rate increases. Gov. Lou Leon Guerrero initially allocated about $14 million for the rate mitigation, but ultimately drew out $2 million from the allotment to add to the Local Employers Assistance Program.
For fiscal 2023, GWA proposed a new rate design to the PUC, which included tiered “volumetric rates.” This new design would have effectively resulted in an 8.1% increase over fiscal 2021 revenues but with lower water and sewer rates for 30% to 40% of GWA’s customer base, according to the water utility. GWA’s request also incorporated a 6.5% increase in fiscal 2024, subject to true-up.
Georgetown proposed no rate increases, suggesting that GWA could use its relief funding and certain reserves. But according to Bordallo, Georgetown did not analyze beyond 2024, and the consultant’s proposal would lead to significant increases by 2025.
Ultimately, the PUC did not go with their consultant’s proposal but also chose to hold off on tackling GWA’s new rate structure while also deferring action on GWA’s proposed customer assistance program, which would grant discounted rates for qualified low-income families.
The Guam Waterworks Authority Northern District Wastewater Treatment Plant in Dededo is pictured Aug. 18, 2023.
