John M. Benavente General Manager of Consolidated Utilities

Services

Consolidated Commission on the Utilities

Diversification of Energy for Guam

• Why Diversification?

• Journey Towards Diversification

• Potential Investment in Guam’s Economy

• Potential Benefits to the Region

Why Diversification?

USEPA Rules and Regulations: • Requires the substantial investment of about $400M to comply

• Operating Cost will increase with the emission controls applicable

• Non-Compliance penalty is $37K/Day/Unit ( 8 units subject to penalty)

• Existing units continue to be subjected to more environmental controls

• USEPA continues to move electric industry away from dirty fuel

Fuel Oil Portfolio: • High prices – ever increasing LEAC (Levelized Energy Adjustment Clause was $0.05/Kwh in 2005; today it is at

$0.18/Kwh)

• Fuel Oil prices Volatile and difficult to predict

• Diesel Fuel Oil is a clean fuel but price is substantially higher than RFO and LNG . Diesel fuel is used for fuel diversity and security in the event our main fuel oil source is disrupted.

LNG Future: • Substantially abundant and reserves Larger than Oil

• Provides Energy Security because known reserve is most abundant in the USA.

• USA Holds Largest reserves and has a major influence on price

Renewables: • Solar Panel Cost has Decreased Substantially

• Green Energy Revolution in the USA provides continual innovations

• Long term contracts provide stable energy cost

• Provides economic stimulus to the Island by converting oil revenues to jobs

Impact of USEPA Latest Regulations

Estimated Investments Required to Comply

Rate Increases Proportional to Fuel Cost Increases!

$0.000

$0.050

$0.100

$0.150

$0.200

$0.250

$0.300

$0.350

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

$/

kw

h

GPA Revenue/Cost

Revenue/kwh

Fuel Cost / kwh

Other Cost/kwh

Renewable Portfolio:

• 25 MW Solar PV by NRG in 2015

• 10 MW Wind Energy by PGR in 2016

• GPA Phase II Renewables Bids 40 MW

• GPA Rooftop Solar PV Bids 10MW

• Phase III (DoD Partnership) Solar PV >45MW

• Net Metering (170 Customers to date – 1.9MW)

55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 57 57 55 55

55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 55 57 57 55 55

0 -5 -5 -5 -5 -10 -11

-15 -20 -20 -20 -20 -20

-20 -20 -20 -9

11

19

23

56 47 42 27

0

50

100

150

200

250

300

Me

ga

wa

tts

CY2020; 250MWPeak; 120MW PV; 120MW CC-LNG; 60MW Battery Storage

Firm Energy = 78%; Solar PV Energy = 22%

Solar PV

60MW BES

MEC9 LNG

MEC8 LNG

CC2 LNG

CC1 LNG

Journey Towards Diversification

• Implementation of GPA’s Integrated Resource Plan: – Ongoing Activities:

• Deactivation of Older Less Efficient Generating Units

• Implementation of Centralized Renewables ( 35MW)

• Procurement of Additional Renewables Phase II (40MW)

• Procurement of Rooftop Solar PV (10MW)

• Partnering with Navy for Renewables on their Property (45MW)

• Partnering with Navy on Utility Energy Service Contract (UESC)

• Procurement of our Centralized Energy Storage (40MW)

• Preparing to Optimize our Load with Demand Side Management

• Evaluating the potential role of a Demand Response Program

• Evaluating the potential role of Electric Vehicles

• Seeking Authority for the Procurement of Efficient Firm Resources

• Continuing to Evaluate feasibility of Conversion to Clean Natural Gas

Potential Investment in Guam’s Economy:

• New Firm Power Resources - $350M

• Infrastructure for Conversion to LNG - $250M

• Renewable Contracts in Progress - $150M

• Future Renewable Bids - > $300M

• Energy Storage Batteries - > $100M

• Greater than $ 1B in Capital Investments thru 2022!

• Add Multiplier Effect of ?? on Economy = Substantial!

• Investments provide Annual Jobs for O & M.

• LNG Provides Other Investment Opportunities

Benefits to Region:

• Guam’s renewable programs would help the

other islands obtain lower cost renewables.

Potentially lots to gain because the other island’s

energy cost is greater than $0.40/Kwh.

• An LNG Infrastructure in Guam would provide

opportunities for the Islands to they themselves

burn LNG at a substantially lower cost than the

Diesel fuel oil they currently burn.

• Guam’s Future may be the region’s future!

Questions?

• Dankulu na Si Yu’us Ma’ase!