Next few months of volatile oil market to determine impacts to power bill

Rising fuel prices tied to the conflict involving Iran are now impacting more than just what you pay at the pump. The Guam Power Authority says the price of oil purchased in the months of April through July will be key in determining how much of an impact residents will face in power bills. 

Right now, local drivers are paying more than $6 a gallon for gas, and those same rising fuel costs are now starting to hit something else: your power bill. GPA says global oil prices tied to the Iran conflict could push monthly bills higher, with some households paying up to $39 more in the months ahead.

"Over the next several months, especially through April and July, we will be going out and buying fuel every month," explained John Benavente, GPA's general manager in an episode of KUAM's The Interview. "So, it’s the pricing during that period of time that would determine how much of an impact it makes on our customers."

Benavente says future increases will depend on upcoming fuel deliveries and how global oil prices stabilize in the coming months. He added, "What we’re looking at now is hopefully things settle in and the price starts coming down, because actually they haven’t been coming down. They’ve just been spiking way up at this point."

Despite the uncertainty, GPA is recommending no immediate increase to the Levelized Energy Adjustment Clause (LEAC) - the part of your bill that reflects fuel costs. "Right now, we’re going to use our cash reserves to buy the fuel. The only time, the only condition that will change is if in the next several months, the oil prices stay up and the volume that we have to buy exceeds our cash reserves," he said.

Under current projections, residents could see increases from $11 up to $39 a month. Benavente warns that’s not taking into account increased consumption in the hotter months ahead.  Benavente says a key reason the increase isn’t higher is the new Ukudu Power Plant, a more efficient facility that uses significantly less fuel than older generators.

He said, "It’s a gamechanger - a gamechanger in that the cost of the power plant whereas Guam used to consume 8,000 barrels a day without Ukudu, it is now only using 5,000 barrels a day. So everyday, we’re saving 3,000 barrels of fuel that’s not impacted by additional cost."

The GM says the plant is reducing the impact of fuel spikes by more than half, about 53%, and could lower system fuel exposure by over $50 million.

For the time being, the current LEAC rate remains in place through July, when GPA is expected to reassess fuel costs. "But again," Benavente said, "the next several months of fuel purchases will determine what that LEAC is. Certainly at some point in the near future as we buy those fuel, we can provide an update as to what’s happening. The key here right now is that we’re not impacted yet. We do have 45 days of fuel, and that was bought at $100 to $105 a barrel."

And while GPA says the impact could have been worse, the reality is customers may still be paying more in the months ahead, all driven by a conflict happening thousands of miles away from Guam.