14th Annual PPA Conference Guam Power Authority 1 Committing to Prudent Fuel Use: GPA’s Process to Reduce Fuel Expenses

Presenters John J. Cruz Jr., P.E. Jennifer G. Sablan Lorraine O. Shinohara, P.E. Barbara C. Cruz, P.E. Henry Pilayan Joyce N. Sayama, MBA 24th Annual PPA Conference

14th Annual PPA Conference Guam Power Authority 3 What is LEAC? Levelized Energy Adjustment Clause Mechanism to recover actual fuel costs 6 Month Rate Period PUC Approval Required Allows for variance true-up during rate period from LEAC period projections

14th Annual PPA Conference Guam Power Authority 4 GPA In a Tight Spot Non-Collection of Major Customers Poor Reliability due to Deterioration of Plant and T&D Equipment Funds diverted for Typhoon Recoveries (Chata’an & Pongsona) ~$13 Million of under-recovered fuel expense

14th Annual PPA Conference Guam Power Authority 5 Growth in Under-Recovery of Fuel Expenses Prior to CCU Right On Track Base Load Repair

14th Annual PPA Conference Guam Power Authority 6 GPA & PUC Collaboration GPA requests to recover fuel costs for LEAC periods in FY00-FY02 PUC initially objects to recovery of funds due to prior imprudent management GPA presents plan to rehabilitate plants and develop performance standards for recovery efforts PUC allows recovery efforts based on GPA meeting satisfactory performance of prudent fuel use

14th Annual PPA Conference Guam Power Authority 7 Ensuring Prudent Management Quality Management Plan for Prudent Fuel Use Quality Management Plan for the Cost- Effective Reduction of Unaccounted for Energy Quality Management System for Ensuring LEAC Plan Performance Goals

14th Annual PPA Conference Guam Power Authority 8 QMP: Prudent Fuel Use System Operation Performance Standards Baseload (90%) vs. Diesel (10%) Production Heat Rate Equivalent Availability Factor Implementing PMC Contract for Cabras 3&4 Power Plant

14th Annual PPA Conference Guam Power Authority 9 QMP: Cost-Effective Reduction of Unaccounted for Energy Identifying Losses Meter errors Line Losses GPA Own-use Billing Errors Identifying large recovery with quick & least cost efforts Implementing Task Forces

14th Annual PPA Conference Guam Power Authority 10 QMP: Ensuring LEAC Plan Performance Goals LEAC / Prudent Use Fuel Use Process LEAC Implementation Process Control Charts

14th Annual PPA Conference Guam Power Authority 11 QMS: Prudent Fuel Use

14th Annual PPA Conference Guam Power Authority 12 LEAC/Prudent Fuel Use Implementation Process

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14th Annual PPA Conference Guam Power Authority 14 Fuel Use Performance Chart

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14th Annual PPA Conference Guam Power Authority 16 GPA Today & Tomorrow GPA focusing on plant improvements for efficiency, reliability and availability Diesel Unit operations are minimal Outage scheduling/planning and implementation are well coordinated GPA has evolving and working processes to ensure cost effective production for GPA customers