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PUC authorizes GPA to solicit line of credit, counsel recommended $70M cap
Summary
After a lengthy discussion about rising fuel costs and alternatives, the Guam Public Utilities Commission voted unanimously to allow the Guam Power Authority to solicit a line of credit for fuel purchases; legal counsel recommended a $70 million authorization rather than GPA's requested $100 million.
The Guam Public Utilities Commission on May 21 approved Guam Power Authority's request to solicit a line of credit to cover volatile ultra‑low sulfur diesel fuel costs, after legal counsel recommended a $70 million limit on the solicitation.
PUC legal counsel Anthony reviewed GPA's petition (docket 2612), noting GPA had asked to solicit a line of credit as large as $100 million. Counsel said historical lines of credit for GPA were $35 million and recommended a $70 million facility as sufficient to cover current shipment costs (GPA had cited a current shipment price near $68 million) while following GPA's contract review protocol that allows a 20% contingent cushion without further PUC approval.
"If the PUC authorizes a $70 million amount, that additional leeway is about $14 million," Anthony said, describing the protocol's contingent allowance. Counsel told commissioners that GPA still must obtain the governor's approval if indebtedness is created by the contract, and that the exact cost of any facility would be known only after GPA completes competitive solicitation.
Commissioners and GPA officials discussed tradeoffs between a $70 million authorization and the $100 million GPA requested. GPA officials and commissioners noted recent volatility: GPA said a fuel shipment price had risen from roughly $25 million historically to about $68 million recently, and projected an under‑recovery of about $27 million by June 30 if rates are not adjusted. Commissioners also emphasized that the line of credit is intended to purchase fuel (cash up front or credit) and not to replace the "LEAK" under‑recovery mechanism used to smooth rates.
Commissioners asked whether GPA had enough cash for an imminent shipment (GPA estimated a next shipment at about $44 million) and pressed GPA on sourcing alternatives and storage capacity to increase resilience. GPA said it continues to pursue multiple options, including local bank participation and potential suppliers beyond Singapore, and that it will report back to the PUC on procurement outcomes and pricing.
After discussion, the Commission moved to approve GPA's petition to solicit a line of credit; the motion carried unanimously. The record reflects counsel's recommendation that solicitation be limited to $70 million with instructions to follow GPA's contract review protocol and to return to the PUC with procurement results and final contract terms for review and, if required, governor approval.
Next steps: GPA may solicit proposals consistent with the guidance; PUC staff will expect notice of bids received and a report on the selected facility and costs before final contract execution.
