The Guam Power Authority (GPA) is in the midst of negotiations regarding a potential payment of $5.2 million to the contractor responsible for the Ukudu power plant, Guam Ukudu Power. This payment pertains to additional energy supplied to the electrical grid during the last quarter of 2022, a period marked by significant delays in the plant's full activation. GPA General Manager John Benavente informed the Consolidated Commission on Utilities (CCU) that discussions are ongoing, with a resolution expected to be presented at the upcoming CCU meeting on Tuesday.
Delayed Activation Raises Financial Stakes
The $5.2 million payment is not the only financial concern facing Guam Ukudu Power. The contractor is also liable for damages exceeding $22 million, stemming from the late delivery of the Ukudu plant. This financial burden arises from a contractual agreement in which Guam Ukudu Power agreed to pay $240,000 in liquidated damages for each day the project was delayed beyond the original commissioning date of September 30, 2022. GPA had previously advanced $4 million to accelerate the plant's activation, a payment that would now be forfeited due to the delays.
Benavente detailed that during the 86-day delay leading up to the plant's eventual commissioning on December 25, 2022, the contractor continued to perform additional testing, feeding energy into the grid to alleviate load shedding during Guam's hot summer months. This energy was crucial in maintaining the stability of the electrical supply while the GPA awaited the full operational capacity of the Ukudu plant. According to GPA's communications, the payments owed by Guam Ukudu Power for the months of October, November, and December amount to $7.44 million, $7.2 million, and $7.44 million, respectively.
Negotiations and Future Implications
As GPA and Guam Ukudu Power engage in negotiations, both parties are weighing their options. Benavente emphasized GPA's intent to be fair, stating, "Our position is, we will be fair, because we pay for what we get." However, the contractor has requested to defer the payment of the October damages until February, indicating a willingness to pay interest on the outstanding balance. This request reflects the ongoing financial stress that both parties are experiencing amid the negotiations.
CCU Chairman Francis Santos expressed his expectation for GPA to receive the liquidated damages due while also being open to discussions regarding the payments owed for energy consumption. Santos noted that the commission is willing to consider offsetting the amounts owed based on negotiations surrounding the additional energy provided by Guam Ukudu Power during the delays. This complex financial situation may lead to further adjustments in the contractor's obligations, contingent upon successful negotiations.
The Path Ahead for Guam's Energy Sector
The ongoing situation surrounding the Ukudu power plant underscores the challenges faced by Guam's energy sector as it strives to meet the island's growing demand for reliable power. The GPA's dealings with Guam Ukudu Power serve as a reminder of the delicate balance between ensuring timely project delivery and managing financial obligations. As the GPA prepares for the CCU meeting, stakeholders are looking for clarity on how these negotiations will unfold and what implications they may hold for future energy projects.
The resolution of these financial disputes is critical not only for the GPA and Guam Ukudu Power but also for the residents of Guam who rely on a stable and affordable energy supply. As discussions continue, the outcome could influence how future contracts are structured and executed, potentially paving the way for more robust accountability measures within the energy sector.