s <

fk

1PIDP Pacific Islands Development Program

3$

^ Q I C

RSi Resource Systems Institute

ENERGY MISSION REPORT GUAM

ENERGY PROGRAM

S3 East-West Center Honolulu, Hawaii

i

PACIFIC ENERGY PROGRAM MISSION REPORT

GUAM

1986

EAST-WEST CENTER

PACIFIC BASIN DEVELOPMENT COUNCIL

i i i

Pacific Energy Progran Mission Report

GUAM

Page

PREFACE v

EDITORIAL NOTE v i i

MAP ix

1. SUMMARY AND RECOMMENDATIONS 1

2. COUNTRY BACKGROUND 6

3. PATTERNS OF ENERGY SUPPLY AND USE 11 3.1 Petroleum Fuels 11 3.2 Electricity 14 3.3 Bicmass Fuels 20 3.4 Sunmary of Energy Use 20

4. INDIGENOUS ENERGY RESOURCES: PROSPECTS FOR DEVELOPMENT . . . 22 4.1 Indigenous Resources 22 4.2 Mediun and Large Power Systems 28 4.3 Small Power Systems 36 4.4 Industry and Commerce 37 4.5 Transportation 40 4.6 Households 40 5* PETRCLEUM AND FOSSIL FUELS 45 5.1 Supply and Storage 45 5.2 Pricing and Price Control 48

6. ELECTRICITY 50 6.1 Institutional Arrangements 50 6.2 The Power System 51 6*3 Planning Issues 53 6.4 Management Issues 59 6.5 Electricity Pricing 60 6.6 Rural Electrification 62

7. ENERGY CONSERVATION AND MANAGEMENT 63 7.1 Opportunities for Energy Savings 63 7.2 Government Measures 68

8. ENERGY ADMINISTRATION AND PLANNING 70 8.1 Present Arrangements 70 8.2 Issues and Options 70

APPENDICES 73

V

ffl£EA£E

This report i s one of the products of a cooperative progran in

which a nunber of organizations worked together in helping Pacific

countries to assess their situation and needs in the development and

management of energy resources, leading to the formulation of regional

prograns for assistance to the countries in this f ie ld.

With the East-West Center (EWC) acting as general coordinator, the

Pacific Basin Development Council (PBDC) was jointly responsible for the

funding and production of this report.

The mission visited Guam from October 1-9, 1985. It was composed

of Charles Feinstein (Econcmist-Engineer). The author i s grateful to the

research and support staff of the Resource Systens Institute and the

Pacific Islands Development Progran of the EWC for enabling the editing,

preparation, processing, and circulation of the report.

Due to tight constraints on time available in the field and in the

office, no attempt has been made to project present and possible future

patterns of development in the energy sector to forecast demand in 1995 and

beyond.

v i i

EDITORIAL NOTE

Note that where information about a particular subject has been

omitted, or where a subject had already been merged with a related topic,

the designation "N.A." may appear after a paragraph or section nunber

(e.g., 4.2.10 N.A.). The purpose of the "N.A." designation i s to alert the

reader to the fact that there may be information of general interest on

this subject availahle in other country reports.

In addition, 3 periods ( i .e . , . . . ) indicates that information i s

not available. A dash ( i . e . , —) indicates zero or an insignificant

quantity.

Source: Territorial Energy Assessment: Final Report. USDOE, 1982.

1

1. SUMMARY AND RECOMMENDATIONS

1.1 Summary. Energy use i n Guam i s dominated by the m i l i t a r y s e c t o r ,

which accounts f o r 72 percent o f t o t a l energy consumption. The Government

o f Guam has moderate p rospec t s f o r r educ ing the impact o f the c o s t o f

energy on the c i v i l i a n economy over the next decade through the use o f

l o c a l l y a v a i l a b l e energy sources . Wind-generated e l e c t r i c i t y and d i r e c t

s o l a r appear t o have the g r ea t e s t near- term a p p l i c a t i o n ; however, the

magnitude o f the wind resource i s not w e l l e s t a b l i s h e d . Bicmass p o t e n t i a l

i s c o n s t r a i n e d by l a n d access q u e s t i o n s , w h i l e the s u b s t a n t i a l OTEC

resource i s not l i k e l y t o be economica l ly tapped before the end o f the

cen tu ry . A l t e r n a t i v e energy development may be promoted by l i b e r a l i z i n g

c u r r e n t l e g i s l a t i o n r e g u l a t i n g the purchase o f independent ly produced power

by the Guam Pcwer A u t h o r i t y (GPA). Recent ly implemented and a n t i c i p a t e d

improvements i n the G P A ' s o p e r a t i n g environment, i n c l u d i n g o i l price

modera t ion , r e s t o r a t i o n o f ra te-making a u t h o r i t y , t e r m i n a t i o n o f the power

pool agreement, and upgraded l o a d f o r e c a s t i n g c a p a b i l i t y should i nc r ea se

the u t i l i t y ' s f i n a n c i a l s t a b i l i t y . Broadening and s t r eng then ing the r o l e

o f the Guam Energy O f f i c e i s r e q u i r e d t o p rov ide g r ea t e r n a t i o n a l

c o o r d i n a t i o n o f energy mat te rs , i n c l u d i n g non-renewables such as c o a l and

pe t ro leum.

1.2 Main Recommendations and Conc lus ions

1.2.1 Indigenous energy r e sou rces : P rospec t s f o r development

o The l a n d resource o f Guam i s untapped f o r bicmass energy development, but s e r i o u s q u e s t i o n s o f access , competing uses , and c o m p a t i b i l i t y w i t h o the r forms o f development e x i s t .

o I f master l and-use p lans a re t o be f o l l o w e d , no more than 5,000 acres a re f r e e f o r p l a n t a t i o n f o r e s t r y development. I f conver ted t o e l e c t r i c power a t t y p i c a l e f f i c i e n c i e s , t h i s bicmass p o t e n t i a l r ep resen t s s l i g h t l y over 4 percent o f i s l a n d - w i d e e l e c t r i c a l power requi rements .

2

o At assumed wood y i e l d s o f 25 bone-dry t ons /ha /yea r and c o s t s o f $6G/BDT, a w o o d - f i r e d power s t a t i o n f o r Saipan i s uncompet i t ive w i t h o i l - f i r e d steam t u r b i n e gene ra t ion a t 1985 o i l p r i c e s . No a c t i o n o the r than cont inued y i e l d / s p e c i e s t r i a l s i s recommended a t t h i s t ime .

o The proposed 2 .7 MM refuse i n c i n e r a t i o n p l a n t i s not f i n a n c i a l l y v i a b l e as an energy p ro j ec t a t t h e e s t a b l i s h e d Guam Power A u t h o r i t y (GPA) power purchase r a t e o f 4 .5 £/kWh. However, i t i s l i k e l y suppor tab le f o r the p r o v i s i o n o f e n v i r o r m e n t a l l y benign waste d i s p o s a l s e r v i c e s .

o R u n - o f - r i v e r and impoundment--type hydropower p o t e n t i a l i s l i m i t e d and o f minor importance. Only the Northern D i s t r i c t Sewage System o u t f a l l appears economic as a hydropower source .

o The wind energy resource appears t o be u t i l i z a b l e , but cannot be s a i d t o be adequately ca ta logued . F u r t h e r resource assessment, as recommended i n the 1963 D r a f t Ten Year A l t e r n a t e Energy P l a n , i s war ran ted .

o GPA has no independent b a s i s f o r e s t i m a t i n g the magnitude and r e l i a b i l i t y o f power genera t ion from proposed windfarming p r o j e c t s . I t i s t h e r e f o r e i m p o s s i b l e f o r GPA t o a s s i g n l o a d and p r o b a b i l i t y f a c t o r s t o wind power systems necessary f o r proper wind energy v a l u a t i o n and f u t u r e genera t ion p l a n n i n g .

o Assumptions made i n the January 1985 f i n a n c i a l a n a l y s i s o f the proposed Na tu r a l Energy C o r p o r a t i o n wind power p r o j e c t were u n r e a l i s t i c and p r e d i c t a 2016 f u e l o i l p r i c e of $588.74 per b a r r e l . The a v a i l a b i l i t y o f cheaper s u b s t i t u t e s such as c o a l or even s y n f u e l s was i gno red i n the a n a l y s i s .

o Ocean thermal resources a r e s u b s t a n t i a l , but l a c k o f t e c h n o l o g i c a l and economic read iness p rec ludes e x p l o i t a t i o n . M o n i t o r i n g OTEC development, p a r t i c u l a r l y i n H a w a i i , i s recommended.

o Because o f the h igh percentage (98 percent) o f hemes p r e s e n t l y s u p p l i e d by the c e n t r a l i z e d g r i d on Guam, t o t a l demand i n the v i l l a g e and outpost s ec to r i s very s m a l l . Demands o f i s o l a t e d consumers can be conven ien t ly met w i t h p h o t o v o l t a i c power, a l b e i t a t a h ighe r e f f e c t i v e p r i c e o f e l e c t r i c i t y .

o The f e a s i b i l i t y o f wood- f i r ed g a s i f i e r s / h o t - a i r genera tors i n commercial hea t - - ra i s ing a p p l i c a t i o n s i s l e s s f avo rab l e than i n o the r P a c i f i c l o c a t i o n s f o r reasons o f h igh o p e r a t i o n s and maintenance ( O M ) l abor c o s t s and u n c e r t a i n t y of wood s u p p l y .

o The magnitude o f h o t e l ho t water demands should be determined. Low-temperature needs a re s u i t a b l e f o r supply by d i r e c t s o l a r or c e n t r a l a i r c o n d i t i o n e r c h i l l e r was te-heat recovery systems.

3

o I n d u s t r i a l - s i z e heat pimps represen t an a t t r a c t i v e energy a l t e r n a t i v e i n h o t e l s , r e s t a u r a n t s , food s e r v i c e f a c i l i t i e s , and l i g h t manufactur ing concerns , p a r t i c u l a r l y where e l e c t r i c r e s i s t a n c e h e a t i n g u n i t s a re employed.

o B e n e f i t s from s o l a r domestic ho t water (SDHW) r e t r o f i t s a r e s u b s t a n t i a l , i n c l u d i n g r e d u c t i o n o f t o t a l energy and g r i d peak demands. With " S o l a r Bank" s u b s i d i e s , s imple payback t imes o f under four years r e s u l t when the domest ic-consuner e l e c t r i c i t y t a r i f f r a t e i s a p p l i e d .

o Heat pimps p rov ide b e n e f i t s s i m i l a r t o SDHW i n domest ic a p p l i c a t i o n s . L o c a l promotion o f t h i s technology shou ld be undertaken as soon as p r a c t i c a b l e .

1.2.2 Petroleum

o Petroleum product ( i . e . , f u e l o i l ) procurement u s i n g a RFP/open p roposa l s procedure r a i s e s concerns about e f f i c i e n c y and p o t e n t i a l f o r abuse. A t e n d e r i n g / b i d arrangement i n which terms and c o n d i t i o n s a r e f u l l y s p e c i f i e d and f i x e d i n t h e s o l i c i t a t i o n ensures t h a t c o m p e t i t i o n i s s t r i c t l y on p r i ce—and i s thus p r e f e r r e d .

o G i v e n the so f tness i n t o d a y ' s o i l market, long- te rm supply arrangements a re i n a d v i s a b l e . One t o two y e a r s i s t h e a p p r o p r i a t e r e n e g o t i a t i o n p e r i o d .

o The Guam Power A u t h o r i t y ' s access t o and f a m i l i a r i t y w i t h i n f o r m a t i o n on A s i a / P a c i f i c market t rends i s not commensurate w i t h i t s impor tant r o l e as n e g o t i a t i n g agent and impor te r o f over $25 m i l l i o n o f f u e l o i l a n n u a l l y . R e l a t i v e l y s imp le measures such as s u b s c r i p t i o n t o an o i l market m o n i t o r i n g j o u r n a l a re l i k e l y t o produce s i g n i f i c a n t r e t u r n s .

1.2.3 E l e c t r i c i t y

o Inadequate r a t e s t r u c t u r e s , u n d e r c a p i t a l i z a t i o n , a d e t e r i o r a t e d r e g u l a t o r y c l i m a t e , and r a p i d l y i n f l a t i n g o i l p r i c e s a l l c o n t r i b u t e d t o a d i f f i c u l t decade f o r the Guam Power A u t h o r i t y . These nega t ive f a c t o r s have been s u b s t a n t i a l l y reversed i n the l a s t 18 months. Optimism i s tempered, however, by recent r e v e l a t i o n s o f i l l e g a l procurenent p r a c t i c e s by GPA management.

o System t r a n s f e r and the t e r m i n a t i o n o f the Navy-GPA power poo l agreement i s recommended as a mat ter o f p r i o r i t y . I n t h e i n t e r i m , the pool agreement should more c l o s e l y r e l a t e charges and reimbursements t o the marg ina l gene ra t i on c o s t o f the e l e c t r i c system, w i t h adjustments t o r e f l e c t each p a r t y ' s c o n t r i b u t i o n t o systemwide genera t ion e f f i c i e n c y . I n a d d i t i o n , the Navy ' s s p i n n i n g r e se rve and rese rve margin requirements impose unreimbursed c o s t s on GPA are l i k e l y to be

4

g r e a t e r than the i nc r ea sed gene ra t i on r e l i a b i l i t y b e n e f i t r e c e i v e d by the c i v i l i a n p o p u l a t i o n .

o Because o f r a p i d l y changing econanic c o n d i t i o n s and the s u s c e p t i b i l i t y of the economy t o e x t e r n a l events , Guam's p l ann ing envi ronnent presents severe d i f f i c u l t i e s f o r demand f o r e c a s t i n g . Never the less , w h i l e GPA cannot be expected t o a t t a i n the l e v e l o f p r e d i c t a b i l i t y found i n much l a r g e r mainland u t i l i t i e s , the v o l a t i l i t y o f t o d a y ' s energy market demands a p l a n n i n g - s k i l l s upgrade i f f i n a n c i a l s t a b i l i t y i s t o be ach ieved .

o As a f i r s t s tep, i t i s recommended t h a t the Guam Energy O f f i c e (GEO) complete c o m p i l a t i o n o f the energy survey da ta c o l l e c t e d f r a n 4 ,000 households i n 1984/85 and present the r e s u l t s t o GPA f o r f u r t h e r a n a l y s i s . F o r e c a s t i n g methodology a s s i s t a n c e i s a v a i l a b l e from U . S . u t i l i t i e s and p r i v a t e c o n s u l t i n g o r g a n i z a t i o n s . In a d d i t i o n , c o n s i d e r a t i o n should be g i v e n t o the appointment o f a q u a l i f i e d economis t /p lanner t o the s t a f f o f GPA.

o I t appears t h a t new capac i t y w i l l be r e q u i r e d sometime i n the mid-1990s t o r ep l ace ag ing p l a n t s and t o lower the c o s t s o f gene ra t i on o f the marg ina l u n i t s . GPA has taken a c o n s e r v a t i v e but r e a l i s t i c view i n c o n s i d e r i n g an o i l - f i r e d , combined-cycle gas t u r b i n e system as the l e a s t - c o s t expansion/replacement a l t e r n a t i v e . I n s t a l l e d c o s t o f the 77 MW f a c i l i t y was es t ima ted a t $38 m i l l i o n i n 1982.

o The c o a l o p t i o n war ran t s s e r i o u s c o n s i d e r a t i o n . Coal a t $50/tonne i s l e s s than h a l f the f u e l cos t o f d i e s e l and the w o r l d c o a l market i s more s t a b l e than t h a t f o r o i l . U n c e r t a i n t i e s over p o l l u t i o n c o n t r o l c o s t s and i n a b i l i t y t o r a i s e f i nance a re major c o n s t r a i n t s . GPA i s adv i sed t o moni tor the exper imenta l burning o f c o a l by Hawa i i e l e c t r i c u t i l i t i e s .

o The passage o f P . L . 17-77, the " A l t e r n a t e Energy P l a n f o r Guam" A c t , by the 1984 Guam L e g i s l a t u r e impedes the p r i v a t e gene ra t ion and s a l e of e l e c t r i c power by a l t e r n a t i v e means. A more long- te rm approach t o energy p o l i c y / p l a n n i n g , as s p e l l e d out i n the 1983 "Framework f o r an A l t e r n a t e Energy P l a n f o r Guam" by V i n e t a and A s s o c i a t e s , i s recommended. Power purchase r a t e s must s t r i k e a balance between immediate and long- te rm economic i n t e r e s t s .

o L o s s o f ra te-making a u t h o r i t y has, i n the past , exacerbated G P A ' s f i n a n c i a l i n s t a b i l i t y . The present a d m i n i s t r a t i v e arrangement o f a r e g u l a t e d u t i l i t y monopoly overseen by an appointed commission i s an app rop r i a t e s t r u c t u r e and i s recommended f o r c o n t i n u a t i o n .

5

o I n s t i t u t i o n o f a " l i f e l i n e " r a t e w i l l ease the e l e c t r i c i t y c o s t burden on low-income consumers and i s p r e f e r r e d t o d i r e c t s u b s i d i z a t i o n .

1.2.4 .Energy c o n s e r v a t i o n and management

o There i s c o n s i d e r a b l e scope f o r c o n t i n u i n g consumer educa t ion on energy e f f i c i e n c y . An e f f e c t i v e channel would be through the u t i l i t y b i l l i n g system.

o E f f e c t i v e n e s s o f home energy a u d i t s can be i n c r e a s e d by f o l l c w - u p v i s i t s t o determine implementa t ion r a t e and e f f e c t o f a u d i t recommendations.

o Outs ide o f t r a n s p o r t a t i o n , a i r c o n d i t i o n i n g i s the l a r g e s t c i v i l i a n energy use i n Guam. Enforcement o f 7 8 ° F temperature s tandards can p rov ide immediate a i r c o n d i t i o n i n g sav ings a t almost no c o s t . In the domest ic s e c t o r , n a t u r a l v e n t i l a t i o n can be promoted through a p p r o p r i a t e l y p l aced windows and l o u v e r s , a s s i s t e d by c e i l i n g f ans .

1.2.5 Energy a d m i n i s t r a t i o n and p lann ing

o P o l i c y a n a l y s i s , c o o r d i n a t i o n , and m o n i t o r i n g shou ld be the f u n c t i o n o f the Guam Energy O f f i c e (GEO). The GEO i s a p p r o p r i a t e l y des igna ted i n P . L . 17-77 as the agency r e s p o n s i b l e f o r c o o r d i n a t i o n o f the development o f both conven t iona l and a l t e r n a t i v e energy r e sources . To c a r r y out e f f e c t i v e l y these r e s p o n s i b i l i t i e s i n c o n j u n c t i o n w i t h emphasis on f e d e r a l l y funded c o n s e r v a t i o n and renewables , l o c a l funding suppor t f o r the r ec ru i tmen t o f t e c h n i c a l l y - t r a i n e d p l a n n i n g / a n a l y s i s personnel i s r e q u i r e d .

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2. COUNTRY BACKGROUND

2.1 LsnsJ. Guam, the westernmost t e r r i t o r y o f the U n i t e d S t a t e s , i s

the l a r g e s t and southernmost i s l a n d i n the Mariana A r c h i p e l a g o i n the

Northwest P a c i f i c . The i s l a n d i s 30 m i l e s l o n g , ranges from 5 t o 8.5 m i l e s

i n w i d t h , and has a t o t a l l a n d a rea o f 209 square m i l e s (541 sq km). I t

l i e s 3,700 m i l e s (6,200 km) west-southwest o f Hono lu lu , and on ly 1,500

m i l e s (2,500 km) south-southeas t o f Tokyo. Guam i s composed o f two

d i s t i n c t g e o l o g i c areas o f about equal s i z e . The nor thern p a r t o f the

i s l a n d i s a h i g h c o r a l l i n e l imes tone p l a t eau r i s i n g up t o 850 f e e t above

sea l e v e l . The southern r e g i o n i s mountainous, o f v o l c a n i c o r i g i n w i t h

e l e v a t i o n s o f 700 t o 1,300 f e e t . Guam l i e s w i t h i n the typhoon b e l t and i s

p e r i o d i c a l l y s t r u c k by t r o p i c a l s tcrms and typhoons. A "super typhoon"

w i t h winds exceeding 150 mph (250 km/hr) v i s i t s a t f i v e t o t en y e a r

i n t e r v a l s on average, caus ing ex t ens ive damage.

2.2 .Essols* Guam's mid-year 1983 p o p u l a t i o n was es t imated t o be

113-230—up seven percent frcm the 1980 census t o t a l . Approximately

o n e - f i f t h o f t h i s f i g u r e i s composed o f U . S . m i l i t a r y personnel and

dependents. P o p u l a t i o n dens i ty averages 542 per square m i l e (209 per sq

km) and i s g r e a t e s t i n the urban ized c e n t r a l p o r t i o n o f the i s l a n d .

P o p u l a t i o n inc rease i s expected t o cont inue a t an annual 2.2 percent r a t e ,

w i t h net m i g r a t i o n account ing f o r about one-e ighth o f t h i s growth.

2.3 Government. The enactment o f the Organic Ac t i n 1950 e s t a b l i s h e d

the framework o f Guam's government as an un incorpora ted t e r r i t o r y o f the

U n i t e d S t a t e s . Guamanians a re U . S . c i t i z e n s w i t h a l l r e l a t e d r i g h t s and

p r i v i l e g e s except f o r v o t i n g i n the U . S . p r e s i d e n t i a l e l e c t i o n s . The

i s l a n d ' s government s t r u c t u r e m i r r o r s t h a t o f the U . S . , having e x e c u t i v e ,

l e g i s l a t i v e , and j u d i c i a l branches. S ince 1970, the people o f Guam have

7

e l e c t e d t h e i r own governor . The unicameral l e g i s l a t u r e has f u l l law-making

power i n t e r r i t o r i a l mat ters , i n c l u d i n g a p p r o p r i a t i o n and l i m i t e d t a x a t i o n

a u t h o r i t y . T o t a l government expend i tu re i n f i s c a l yea r 1983 i s e s t ima ted

a t US$178.1 m i l l i o n , about $1,575 per c a p i t a .

2 .4 Economy, The Guam economy r e l i e s on U . S . F e d e r a l Government

expend i tu re and t o u r i s m as t h e primary sources o f i s l a n d revenue. The U . S .

m i l i t a r y p l a y s a dominant r o l e i n income and employment; t o t a l m i l i t a r y

spending on Guam anounted t o $712.0 m i l l i o n i n 1983. Of t h i s f i g u r e ,

$353.6 m i l l i o n was f o r purchase o f m i l i t a r y petroleum products . The

f e d e r a l government, mainly through the Defense Department, a l s o occup ies

over o n e - t h i r d o f Guam's sur face a rea ; some 46,100 acres (18,500 ha) a r e

f e d e r a l l y c o n t r o l l e d . Tourism has expanded from a 6,600 v i s i t o r per y e a r

i n d u s t r y i n 1967 t o over 350,000 a r r i v a l s i n 1993. Some 85 percent o f

t o u r i s t a r r i v a l s a re from Japan. Other l e a d i n g p r i v a t e s e c t o r s a re

r e t a i l i n g and w h o l e s a l i n g , s e r v i c e s , and c o n s t r u c t i o n . Manufac tur ing

d e c l i n e d p r e c i p i t o u s l y i n importance i n 1984 as a r e s u l t o f the c l o s u r e of

the Guam O i l R e f i n i n g Company p l a n t . G0RC0, which l o s t i t s m i l i t a r y

petroleum supply c o n t r a c t , had accounted f o r 90 percen t o f manufactur ing

revenues. A g r i c u l t u r e has d e c l i n e d i n importance and t o t a l revenues i n

t h i s s e c t o r a re under $6 m i l l i o n a n n u a l l y .

Al though complete product and income accounts have not been

developed f o r Guam, dec l a r ed t a x a b l e income f i g u r e s show 11 percen t annual

growth i n nominal terms f o r the p e r i o d 1972 t o 1979. However, when

expressed i n r e a l per c a p i t a terms, income growth was f l a t . Economic

performance i n the e a r l y 1980s was d i s a p p o i n t i n g . The Guam Consumer P r i c e

Index, m i r r o r i n g U . S . t rends , junped 25 percent i n the f i r s t t h ree yea r s o f

the decade, w h i l e r epor t ed incomes i nc r ea sed 20 percen t ; the net r e s u l t was

8

a 5 percent r e a l d e c l i n e . I s l a n d per c a p i t a income p re sen t ly stands a t

about $5,000, very h igh by P a c i f i c s tandards . T o t a l c i v i l i a n employment i n

1983 was 31 ,600. Approximately 30 percent a re T e r r i t o r y o f Guam employees

and 20 percent work f o r the F e d e r a l Government.

2 . 5 Relevant Economic C o n d i t i o n s . The Guam economy h i s t o r i c a l l y

e x h i b i t s "boon or bus t" behavior as a r e s u l t o f s t rong l i n k a g e s t o

e x t e r n a l l y determined even ts . Among these a re U . S . m i l i t a r y spending

l e v e l s , Japanese government p o l i c i e s on t rade and domest ic currency expor t ,

and a i r t a r i f f l e v e l s as a f f e c t e d by o i l p r i c e s . Typhoons produce

"bust/bocm" behavior as i n i t i a l economic dampening g i v e s way t o the s t i m u l i

o f r e c o n s t r u c t i o n and f e d e r a l d i s a s t e r r e l i e f fund ing . The b a s i c

underp inning o f U . S . m i l i t a r y expendi tures r e n a i n s s t r ong , however, and

Guam p resen t ly appears t o be i n a growth phase. The s t r a t e g i c importance

o f Guam i s w e l l known and, a long w i t h T i n i a n , the i s l a n d i s cons ide red t o

be the primary U . S . f a l l - b a c k p o s i t i o n i n the western P a c i f i c . Thus Guam

may again exper ience r a p i d i n c r e a s e s i n defense expend i tu res , depending

upon events i n the P h i l i p p i n e s and Washington.

2 .6 The Role o f Energy Imports . O f f i c i a l import s t a t i s t i c s on m i n e r a l

f u e l impor ts do not a c c u r a t e l y gauge the e f f e c t o f imported energy c o s t s on

the c i v i l i a n economy f a - two reasons : impor t s f o r m i l i t a r y uses a re

i n c l u d e d , as a re crude o i l import f i g u r e s f o r the G0RC0 r e f i n e r y . The da ta

below at tempts t o remove these d i s t o r t i o n s and was es t ima ted from o i l

company c i v i l i a n s ec to r s a l e s da ta and average CIF v a l u e s :

1980 1983

F u e l impor t s ( m i l l i o n $) 89.5 94.6

Percent o f t o t a l impor ts 16 15

Percent o f t o t a l expor t s 147 241

9

T o t a l impor t f i g u r e s i n c l u d e petroleum impor t s f o r m i l i t a r y use o r

r e - e x p o r t . However, f u e l import f i g u r e s a re net o f m i l i t a r y and r e - e x p o r t

uses .

Tab le 2.1

S e l e c t e d I n d i c a t o r s

( m i l l i o n $, u n l e s s i n d i c a t e d )

1979 1980 1981 1982 1983 1984

Pe r sona l income 3 443.0 446.0 459.2 495.9 5 3 5 . 3 d

Expor t s ( F Q B ) b 44.4 61 .0 153-0 d ... 39.2 ... Imports (CIF) 445.8 544.2 7 1 0 . 8 d ... 610.7 ... Balance o f t rade -401 .3 -483.1 -557.8 ... -571 .5 ... Key e x p o r t s :

C l o t h i n g ... ... ... ... 6.4 ... Food ... ... ... ... 4.4 ...

V i s i t o r a r r i v a l s ( '000) 272.6 300.8 321.8 326.4 350.5 361.4

I n f l a t i o n r a t e (%) c 12.1 18.1 21 .9 5.1 3.5 9 .0

P o p u l a t i o n ( f 000) 103.6 106.0 108.3 110.8 113.2 115.7

L i f e expectancy a t b i r t h : 72 years I n f an t m o r t a l i t y : 16 per 1,000 l i v e b i r t h s Rate o f n a t u r a l p o p u l a t i o n i n c r e a s e : 2.4 percent p . a .

Notes : a Dec l a r ed on tax r e t u r n s f i l e d w i t h Guam Department o f Revenue and T a x a t i o n ,

b Inc ludes r e - e x p o r t s and t ranssh ipments , c Annual inc rease i n Guam Consumer P r i c e Index, d Es t ima te o n l y .

Sources : Annual Economic Review and S t a t i s t i c a l A b s t r a c t . 1Q84. Guam: Department o f Commerce.

Q u a r t e r l y Economic Review, A p r i l - J u n e 1Q85. Guam: Department of Commerce.

10

2.7 Development Plans. Economic development plans seek to exp lo i t

Guam's natural advantages: s t ra teg ic pos i t ion i n the Western P a c i f i c ,

proximity to Japan, excel lent deep water port f a c i l i t i e s at Apra Harbor,

and natural beauty. A continued re l iance on federal expenditure as the

stimulus for the l o c a l economy i s the r e a l i s t i c planning assumption.

However, i n an t i c ipa t ion of continued f luc tua t ions i n federal spending

l e v e l s , Guam's leaders are cognizant of the need to d ivers i fy the economic

base. Forenost among non-defense re la ted industry i s tourism, and

continued infras t ructure improvements ( e . g . , roads, sewers, shoreline

access) and overseas promotion are necessary factors for continued v i s i t o r

a t t r ac t ion . Aquaculture, marine f i she r i e s , l i g h t manufacturing, and

f i n a n c i a l services are other commercial a c t i v i t i e s targeted for expansion.

Closure of the G0RC0 refinery resulted i n the e l iminat ion of about 100

jobs, but more s i gn i f i c an t was the l o s s of the second major contributor to

the i s l a n d ' s gross rece ip ts . The Guam Economic Development Authority

offers numerous investment incent ive, loan, and i n d u s t r i a l park prograns to

encourage new industry, and prospects for expansion i n a l te rna t ive areas of

the manufacturing sector are generally considered good.

11

3. PATTERNS OF ENERGY SUPPLY AND USE

3-1 Petroleum Fuels

3-1.1 Overview. Most petroluem fuels are supplied t o Guam by Mobil from

the Jurong Refinery i n Singapore and by Exxon from the Esso Jurong

Refinery. Fuels are brought on 30,000 DWT (MR class) oil-company owned or

long-term chartered tankers, although spot chartered movements occur from

time to time. In the past, GORCO refined imported crudes on Guam for the

supply of U.S. m i l i t a r y uni t s on i s l and and i n the Far East; re f ined

products are now brought i n d i r e c t l y through the U.S. Defense Fuel Region

P a c i f i c supply systen from the depots i n Singapore. Residual fue l o i l

(RFO-6) for the o i l - f i r e d bo i l e r s of the island-wide power systen i s

purchased from independent petroleum marketers under mult i -year contracts .

L i q u i f i e d petroleun gas (LPG) was formerly avai lable at the GORCO ref inery ;

GORCO now operates a bulk plant for LPG sourced i n the Ph i l i pp ines . GORCO

a lso supplies bunkering fuels to the f i sh ing f l e e t s of various P a c i f i c

basin nations.

Use of petroleum fuels i n Guam i s divided between m i l i t a r y and

c i v i l i a n purposes, with the defense establishment accounting for 51 percent

of a l l petroleum imports. C i v i l i a n in te rna l uses i n 1984 amounted to seme

1,849,000 barre ls (bb l ) , about 6 percent higher than i n 1983.

Approximately 58 percent of t h i s fuel was for e l e c t r i c i t y generation, whi le

37 percent was used for ground transportat ion. In addi t ion to imports for

domestic consumption, 627,000 bbl of j e t fuel and 1,800 bbl of av ia t ion

gasoline were sold to overseas a i r l i n e s l i n k i n g Guam to the other

Micronesian i s lands , Japan, and the United States. Sales of bunkering

fuels to in te rna t iona l vessels were 568,500 b b l .

12

3.1.2 Pr ices , Pr ices p reva i l ing i n Septenber 1985 on Guam are shown below:

Wholesale Re ta i l

(U.S. cents per gallon)

Motor s p i r i t (90R gasoline) 126.0 147.9

D i s t i l l a t e (auto diesel) 120.5 142.9

LPG (per lb) 35.0 47.0

(ex-GORCO)

3-1.3 Trends i n demand. Sales of petroleum fuels i n Guam from 1980 to

1984 are shown i n Table 3 .1 . Table 3.1

Demand for Petroleum Fuels (excluding m i l i t a r y )

('000 barrels)

1980 1981 1982 1983 1984

D i s t i l l a t e (ADO) 84.0 ... 87.0 71.9 64.4

Motor s p i r i t 648.0 ... 637.7 650.7 667.0

Kerosene ... ... 1.0 0.4 0.5

LPG 33.0 ... 32.0 32.0 36.0

Fuel o i l (RFO) 1,013.0 950.0 950.0 986.0 1,081.0

Total ground fuels 1,778.0 ... 1,707.7 1,741.0 1,848.9

Avgas 1.0 ... 1.0 3.6 1.8

Je t fuel K (A-1) 1,300.0. ... 422.3 528.0 627.0

TOTAL 3,079.0 ... 2,131.0 2,272.6 2,476.7

International bunkers: Marine d iese l o i l Fuel o i l

114.0 103.0

... .... 150.0 30.0

385.3 80.0

488.5 80.0

Notes: (1) Data represent market sales as reported by o i l companies.

13

1980 data from T e r r i t o r i a l Energy Assessment, USDOE (1982). (2) Data for 1981 unavailable to mission due to transfer of Mobil

operational records frcm Manila to Guam. (3) RFO consumption excludes proportion (43 percent) burned for

power del ivered to Navy. (4) Je t fue l re-exported to foreign ca r r i e r s (Cont inen ta l /Ai r

Micronesia, JAL, A i r Nauru, Northwest Orient, SPIA).

Demand for ground fuels bottcmed-out i n 1981/82, r e f l e c t i n g a commonly

observed two-year adjustment l a g i n price e l a s t i c i t y response stemming frcm

the 1979 o i l shock and a depressed i s l and economy i n p a r a l l e l with the

mainland recession. Since that time, consumption has resumed an upward

trend, with 1984 use being s i x percent above that i n 1983. The increase

r e f l e c t s renewed expansion of e l e c t r i c i t y demand and higher pr iva te motor

veh ic l e use. Recent declines i n auto d iese l consumption r e f l ec t decreased

use of t h i s fue l for power generation, whi le j e t fue l consumption p a r a l l e l s

grcwth i n f l i g h t frequency.

3*1.4 Patterns of use. Domestic use of petroleum fuels on Guam i n 1984

i s described i n Table 3.2 according to the purposes for which the fuels are

used. M i l i t a r y uses do not include consumption by personnel and c i v i l i a n

employees of the U.S. m i l i t a r y for domestic purposes ( e . g . , gasoline

purchased by Guam-based so ld ie r s for use i n pr ivate motor v e h i c l e s ) .

3.1.5 Transportation sector. Transportation of people and goods

accounts for 34 percent of t o t a l c i v i l i a n petroleum consumption,

p r i n c i p a l l y pr ivate autos and gasoline-powered l i g h t t rucks. A publ ic

shut t le van service traverses main Guam routes, but does not impact

s i g n i f i c a n t l y on pr ivate t ransportat ion demand.

3.1.6 E l e c t r i c i t y sector. E l e c t r i c i t y generation i s subs tan t ia l ly the

greatest user of petroleum fuel with 63 percent of t o t a l c i v i l i a n

consumption.

14

Table 3.2

Use of Petroleum Fuel i n Guam, 1984 (terajoules)

M i l i t a r y uses

Household uses

Trans- Heat/Stean E l e c t r i c i t y portat ion r a i s i n g generation Other Total

D i s t i l l a t e 3,558 — 160 120 29 40 3,907

Motor s p i r i t 31 MM 3,424 30 3,485

Kerosene — 2 — — 2

LPG — 75 — — 71 146

Fuel o i l 6,088 — — — 6,688 — 12,776

Je t fuel 7,832 — — — — 7,832

TOTAL 17,509 77 3,584 120 6,717 141 28,148

Note: (1) See Appendix 3*1.4 for der ivat ion of the above breakdown. "Other" includes l o c a l f i sh ing , hotel/restaurant cooking, and construction.

3*1.7 Household sector. Less than one percent of t o t a l non-mili tary

petroleum fuel i s used d i r ec t l y by households. The pattern r e f l ec t s the

dominance of e l e c t r i c i t y as a source of domestic energy. LPG has gained

sane popularity as a cooking f u e l , pa r t i cu la r ly among the F i l i p i n o and

former mainland resident communities.

3-1.8 Heat and steam r a i s i n g . Important users of hot water include

hotels and restaurants, beverage and food processors, and laundry services .

S ign i f i can t amounts of e l e c t r i c i t y are consumed i n apartment/home water

heating appl ica t ions .

3.2 E l e c t r i c i t y

16

3.2.1 Supply. E l e c t r i c power i s supplied f u l l - t i m e through a power pool

agreement between the Guam Power Authority and the U.S. Navy. Under the

pool arrangement, GPA maintains and operates 205 W of generating capacity

and approximately one-third of the island-wide d i s t r i b u t i o n l i n e s , whi le

the Navy s i m i l a r l y has authority for 79 W capacity, the island-wide load

dispatching center, and the balance of transmission f a c i l i t i e s . Nearly 100

percent of generation i s by res idual fue l o i l f i r e d boi ler -s tean turbines.

Diese l generation makes up 32 Mr / of the 284 F W t o t a l i n s t a l l e d capaci ty .

S t a t i s t i c s on the island-wide power systen (IWPS) are shown i n Table 3*3*

Table 3-3

E l e c t r i c i t y Supply i n Guam, 1984

IWPS GPA Navy

Ins t a l l ed capacity (MW) 284.0 205.0 79.0

Firm capacity (MW) 180.0 ... ... Generation (GWh gross) 1,002.3 ... ... Fuel consumption ('000 bbl)

RFO 1,833.0 ... ... Diese l 8 ... ...

Generating ef f ic iency (%) 31 32 24

Peak load (W) 146.7 80.3 ... Load factor 0.78 ... ... Capacity factor 0.40 ... ... Consumers ... 25,748 ...

Notes: (1) Firm capacity r e f l ec t s largest un i t out i n each of two s ta t ions .

17

(2) Load factor i s r a t i o of average load (assuming continuous operation) to peak load .

(3) Capacity factor i s r a t i o of average load to i n s t a l l e d capacity.

(4) Number of customers i s year average.

3.2.2 Households connected to the g r i d . A t o t a l of 22,155 r e s iden t i a l

customers were served i n 1984, representing a connection rate of over 98

percent of a l l households on Guam.

3.2.3 T a r i f f s . E l e c t r i c i t y t a r i f f s are based on qui te de ta i led cost of

service assessments defining eight classes of consumers. Resident ia l

consumers pay 13^/kWh on average. Commercial and government customers

consuming over 5,000 kWh per month are charged based on a monthly demand

reading which determines dec l in ing block rates for monthly energy

consumption. A ho te l , for example, with a peak demand of 250 kW and

consumption of 100,000 kWh/mo would pay an average of 12.84/kWh. Discounts

and penalt ies are assessed on large demand consumers whose power factor

leads or lags , respect ively , the systen average of 85%±1%. A l l b i l l i n g s

are subject to a fue l cost adjustment. The present t a r i f f s went i n t o

effect i n May 1985.

3.2.4 Trends i n e l e c t r i c i t y demand. E l e c t r i c i t y demand has followed a

pattern that r e f l ec t s s e n s i t i v i t y to price and general i s land economic

condit ions. Energy and power demand peaked short ly before the o i l pr ice

escala t ion of 1979 (as passed through to consumers i n the fuel adjustment

clause) and bottcmed-out i n 1982/1983. Since that time, growth has resumed

at a three to four percent annual rate as economic a c t i v i t y r i s e s i n step

with m i l i t a r y spending and U.S. mainland recovery, and as consumers adjust

(with a lag) to new energy pr ices . The r e s iden t i a l sector i s e spec ia l ly

price sens i t ive ; r e s iden t i a l customer average annual use f e l l nearly 10

18

percent per annum frcm 1979 to 1982, but has recently resuned an upward

trend at three percent per year. The commercial sector showed a 7-5

percent upturn i n demand i n 1984, despite only a modest increase i n the

nunber of customers i n t h i s sector.

3.2.5 Patterns of use. As infer red frcm Table 3.4, the domestic sector

accounted for 22 percent of net e l e c t r i c i t y consumption on Guam i n 1984.

I f based on c i v i l i a n uses only ( i . e . , GPA sa les) , t h i s f igure i s 37

percent. Resident ia l customer average monthly consumption i s 655 kWh.

Corresponding f igures for the commercial sector are 25 percent (of to t a l )

and 42 percent (of c i v i l i a n ) , and for the government sector, 12 and 20

percent respec t ive ly . De l ive r i e s to m i l i t a r y establishments comprise 41

percent of a l l e l e c t r i c i t y use.

3.2.6 Rural and urban use. N.A.

3.2.7 Largest consumers. Major e l e c t r i c i t y demanders include the 16

t o u r i s t - c l a s s hotels on the i s l and , the in te rna t iona l a i rpor t , the Guam

Manorial hosp i t a l , and Defense Department f a c i l i t i e s .

Table 3.4

Trends i n E l e c t r i c i t y Demand

1978 1979 1980 1981 1982 1983 1984

Gross genera­t i o n (GWh) 1,075.3

Net system de l ive r i e s (GWh) 952.9

GPA 529.6

Navy 423.3

1,075.0 1,051.7

962.2 933.0

556.9 531.5

405.3 401.5

1,031.9 968.0

907.4 855.3

509.4 486.1

398.0 369.2

965.3 1,002.3

858.0 901.6

499.1 533.0

358.9 368.6

19

Table 3.4 (contd.)

1978 1979 1980 1981 1982 1983 1984

GPA sales (GWh) 461.4 490.1 474.0 452.8 436.0 443.2 463.5

Residen­t i a l 198.9 215.2 195.8 181.2 167.5 166.5 174.1

Commer­c i a l 196.2 196.0 195.3 188.2 186.2 182.9 196.6

Govern­ment 66.3 78.9 82.9 83.4 82.3 93.8 92.8

Peak load (MW) 156.0 157.9 155.3 150.4 143.7 144.3 146.7

GPA only — — 87.8 80.7 78.7 77.3 80.3

Consumers (ave­rage) 22,903 23,506 23,233 24,387 24,471 25,412 25,748

Residen­t i a l 19,616 20,335 20,919 21,035 21,160 21,867 22,155

Commer­c i a l 2,825 2,646 2,685 2,673 2,631 2,784 2,829

Govern­ment 462 525 629 679 680 761 764

Source: Guam Power Authority Annual Report 1984, 1983, 1982.

3.2.8 Peak demand. A i r condit ioning i s the larges t contributor to peak

demand. Peak load throughout the year generally corresponds with a period

of hot, dry cl imate.

20

3.3 Biomass Fuels

3.3.1 Cooking. Biomass fuels have been largely replaced in everyday use

by electricity and LPG, but are used by Guamanian families for traditional

foods preparation on special occasions such as fiestas and weddings. The

Guam Energy Office estimates annual wood consumption for these purposes at

700 oven-dry tons, or 12 terajoules. No marketing of firewood was

observed, nor is there any scarcity of supply. The common firewood species

are Leucaena leucocephala and Leucaena insularum. locally known as

"tangantangan.n These shrub trees were heavily seeded on Guam for soil

stabilization in the wake of World War II bombardments.

3.3.2 Copra drying. N.A.

3.3.3 Other. N. A.

3.4 Summary of Energy Use

3.4.1 Breakdown of total energy consumption. A breakdown of total

energy consumption on Guam in 1984 is shown in Table 3.5. Imported

petroleum fuels account for virtually 100 percent of the total energy use

of 28,164 terajoules.

21

Table 3.5

Energy Use in Guam, 1984 (terajoules)

Imported Indigenous Petroleum Fuels Direct

Direct Indirect Bicmass Solar Total

Domestic 77 1,478 12 5 1,572

Transportation 3,584 n i l n i l n i l 3,584

Ccmmercial 225 1,679 <1 <1 1,904

Government <1 806 n i l n i l 806

Mili tary 17,509 2,754 n i l n i l 20,263

Other 35 n i l n i l n i l 35

TOTAL 21,430 6,717 12 5 28,164

(>99)* (<D% 100*

Notes: Indirect use: Energy used in e lec t r ic i ty generation i s distributed among the sectors according to their e lec t r ic i ty consumption.

22

4. INDIGENOUS ENERGY RESOURCES: PROSPECTS FOR DEVELOPMENT

4.1 Indigenous Resources

4.1.1 Overview. Although deficient in hydropower, Guam i s endowed with

considerable ocean thermal and solar resources; the wind resource appears

substantial but i s not adequately defined. The land resource of Guam i s

untapped for biomass energy development, but serious questions of access,

competing uses and compatibility with other forms of development exist . In

th is section we w i l l identify observed resources, comment on their

significance, and review factors enhancing or impeding their physical and

economic ava i l ab i l i ty .

4.1.2 Biomass resources. Estimates of biomass resource and potential

must be weighed against kncwn physical l imit ing factors and socio-pol i t ica l

access constraints. Seme 43 percent of a l l Guam land i s of greater than 15

degree slope, with the south comprising most of this h i l l y topography.

While valley bottom soi ls are excellent for cult ivation during the dry

season, wet season flooding i s common on these clays. The volcanic red

so i l s i n most of the south are phosphorus deficient, of lew pH (4.1 to

5.8), and generally unsuited for plantation forestry. In the north, a

limestone plateau i s the base for shallow, well-drained so i l s of pH 7.6 to

7.8; much of the limited pitolic land in this portion of the island i s

already leased out to commercial farming ventures.

Standing biomass on Guam consists of tangantangan thickets

(leucaena spp.) aerial ly seeded after World War I I , coupled with areas

dominated by native limestone forest. Land ownership i s one-third private,

one-third public, and one-third military reserve. The Government of Guam

23

Forestry and So i l Resources Division has further delineated land

distribution as follows:

Total Area Federal Non-Federal

Land Area

Cropland 14,185 0 14,185

Pasture land 11,826 0 11,826

Range land 21,454 8,064 13,390

Transition zones 9,000 5,640 3,360

Forest land 51,058 21,155 29,903

Urban land 27,881 11,045 16,836

The current situation of commercial forestry on Guam was thus adequately

described in the 1982 Draft Information for Terr i tor ia l Forestry Resources

Plan: "The forest economic situation i s presently untenahle in the sense

that no landowner has sufficient timber to warrant any sort of sustainable

wood u t i l i z i n g industry. Neither the Federal nor Ter r i to r ia l government

have such holdings that would warrant contractual cutting at this t ime. . .

A viable forest industry such as one producing wood fiber to meet the needs

for local craftwood, l ight construction use, and woodchips to export on the

international market i s not renote and could, indeed, become a real i ty in

the foreseeable future. Bicmass for alternate or supplemental energy

production plus the manufacturing of charcoal are other poss ib i l i t i e s . "

In terms of future forest development, the above physical-legal

mosaic must be overlaid with a planning system that reflects competing uses

and pr ior i t i es . A comprehensive land use plan for the years 1977 to 2000

has been prepared for Guam which classif ies land areas as urban rural ,

mili tary, agricultural, and conservation. The la t ter category i s further

24

subdivided into park, recreational, watershed and ecological s tabi l izat ion

zones, and i s incompatible with intensive agro-forestry operations. Land

intended for agriculture thus makes up 7.3 percent of total Guam surface

area, or just under 10,000 acres (4,000 ha). According to the 1982 Guam

Agricultural Census (USDA), 1,757 acres were in active production for crops

and another 4,241 acres under pasture/grazing.

The conclusion i s that i f master plans are to be followed, no more

than 5,000 acres are free for plantation forestry development. At assumed

yields under short rotation of 25 bone-dry tons (BDT)/ha/yr for exotic

leucaena species (e.g. , "Hawaiian giant"), this represents a biomass

potential of 50,000 BDT/yr. I f converted at 15 percent net efficiency,

this i s 5 We, or s l ight ly over four percent of island-wide e lec t r ica l

power requirements or eight percent of c i v i l i a n demand. Expansion of this

output would be contingent on access to military lands on the north

plateau, which are quite suitable for plantation forestry. A 1982 U.S.

Department of Energy assesaaent reported that the United States mili tary

has expressed a willingness to discuss co-use of seme of i t s extensive

holdings for bicmass production purposes. However, a biomass workshop

panel convened la ter that year concluded that approval for use of mili tary

lands i s doubtful.

4.1.3 Coconut energy resources. N.A.

4.1.4 Other combustible residues. The combustion of municipal sol id

waste has been studied in detail by the Guam Environmental Protection

Agency. Their 1978 study concluded that 258 tons (235 tonnes) of municipal

sol id waste (MSW) were being generated daily on Guam, with military waste

making up approximately 40 percent of this figure. The same study

projected that sol id waste would grow to 366 tons (330 tonnes) by 1985;

25

however, MSW generated on Guam seems to have stabil ized at the 1978 leve l .

The recoverable portion of this waste i s estimated at 200 tons/day (181

tons/day) based on the following waste composition:

Guam Component Average

Paper . 6 1 %

Organics and plastics 201

Glass 8}

Metals 7%

Other 4%

Source: Guam Department of Commerce, 1980

Net heating value i s 4,500 BTU/lb (10.5 KJ/kg).

4.1.5 Charcoal production. Charcoal i s tradit ionally produced on Guam

using the earthen pi t method. The common leucaena (tangantangan) scrub

tree i s used as a feedstock and i s readily available frcm land clearing

operations. The volune of this production i s unknown, but i s not judged to

be significant.

4.1.6 Hydropower. Guam's hydropower potential has been studied by the

U.S. Army Corps of Engineers and by Maruyama and Associates. The reports

basically conclude that run-of-river hydropower i s l imited. The northern

so i l s are highly porous, and there i s no surface water flow on the

limestone plateau. In the south, gauging stations set up beginning in"1950

on 16 major streams record average and lew flows. An additional network of

40 low flow measuring stations monitor smaller streams and tributaries.

The rivers in southern Guam do not carry high sustained flows, and long

26

penstocks are required to obtain sufficient heads. Six si tes with the

highest potential were analyzed for preliminary feas ib i l i ty , and capacities

were found to range frcm 25 to 69 Wrf. Of 32 drainage basins studied, two

were reviewed for impoundments type hydropower schemes. One existing water

supply project, Fena Dan, could be tapped for a maximum 135 kW, although

plant factor i s estimated at only 32 percent. The second impoundment s i te ,

the Ugum river , could produce 400,000 kWh/year (57 kW at 80 percent load

factor) i f developed, less than 0.04 percent of total 1984 e lec t r ic i ty

output.

The Northern Dis t r ic t Sewage System (NDSS) outfa l l i s a possible

hydropower source. A 1981 study by Public Energy Management Consultants

concludes that the NDSS i s capable of producing 50 kWe on a continuous

basis. The system i s i n close proximity to the existing Tanguisson Pcwer

Plant. Capital costs were estimated at $2,185 per instal led kilowatt.

4.1.7 Geothermal. There i s no known geothermal resource on Guam nor

evidence of recent near-surface volcanic ac t iv i ty .

4.1.8 Wind energy. Reliable wind speed measurements are routinely made

at several lew lying sites by the National Oceanic and Atmospheric

Administration and the U.S. mil i tary. This lowland data indicates that

prevailing winds vary in the range frcm 7 to 11 mi/hr (3 to 5 m/sec),

insufficient for e lec t r ic power generation. However, wind patterns are

very si te-specif ic . Measurenents taken at higher altitudes along the

central and southern portions of the is land's east side indicate a

substantial wind resource. The earl iest of these wind monitoring

experiments was performed at Mt. Jumullong-Manglo in July to September 1976

under Terr i tor ia l Energy Office sponsorship. Average wind veloci t ies of

12-17 mi/hr (5-7.5 m/sec) were observed at 20 feet above surrounding

27

terrain during the normally quiescent rainy months. More extensive

measurements were made by the University of Guam with U.S. Department of

Energy (USDOE) funding. Forty-two readings taken over an 11 month period

in 1982/83 at Bubulao produced monthly averages frcm 9 to 24 mi/hr (4 to

10.7 m/sec). Averages exceeded 15 mi/hr (6.7 m/sec) in eight months of the

calendar year. Private windfann developers consider Windward H i l l s to be

the best wind energy s i te on Guam. Data taken by Electrowatt Engineering

Services Ltd. of Zurich i s proprietary to the wind energy proposers and i s

therefore not in the public domain. Thus Guam's wind energy resource

appears to be u t i l i zab le , but cannot be said to be adequately catalogued.

The mission concurs with the recommendation for further resource assessment

made in the 1983 Draft Ten Year Alternate Energy Plan sitomitted to the

governor. Proposed was a mult i-s i te analysis at levels up to 100 feet

above the terrain to be undertaken by the Guam Energy Office. Funding for

this study (estimated at $30,000 per site) frcm local or USDOE sources has

not been secured, however. A last but v i t a l consideration for wind energy

development i s the ab i l i ty of wind generators to survive typhoons that

strike Guam with worrying frequency. I t i s l i ke ly that special designs

would be required to withstand the 150+ mi/hr winds of typhoons Karen

(1962) or Pamela (1976).

4.1.9 Solar energy. pyrheliograph records are available for two sites

on Guam. Monthly average solar energy flux varies between 105-225

kWh/nfVmonth, or 3.5-7.5 kWh/nfVday. On a yearly average basis, the

insolation i s 5 kWh/nfVday. Average monthly cloud cover varies frcm 72 to

89 percent, thus a large proportion of the total solar energy i s diffuse

radiation.

28

4.1.10 OTEC and wave energy. High temperature differentials in the

waters surrounding Guam ooupled with steep offshore submarine topography

make the island a potential s i te for u t i l i z i n g ocean thermal energy

conversion (OTEC) technology, and advocates of OTEC have dubbed Guam "the

Saudi Arabia of the Pac i f ic . " In a study funded by the Guam Energy Office,

the University of Guam Marine Laboratory conducted an annual study of the

oceanographic conditions in the v ic in i ty of Cabras Island and Luminao

Barrier Reef for the potential development of OTEC (Lassyy, 1979).

Lassuy's work showed that in terms of physical paraneters, Guam i s indeed

an excellent s i te for OTEC development. A consistent presence of an annual

mean temperature difference of 42.2°F (23.4°C) exists between the surface

water and water at a depth range of 2,800 to 3,000 feet (854 to 915 m).

Off the western t i p of Luminao Barrier Reef the above temperature

difference and depth range i s reached at a distance of 1.1 miles (1.75 km)

frcm the Apra Harbor breakwater.

4.2 Medium and Large Pcwer Systems

4.2.1 Overview. Guam generates power at three f a c i l i t i e s of over 50 Mrf

instal led capacity each. There i s only one near-term prospect for

displacing a significant proportion of the residual fuel o i l presently used

for power production, and that i s with another imported energy source—coal

(discussed in section 6.3.2). Large-scale substitution with indigenous

resources, such as OTEC, w i l l not be economic within the present planning

horizon. Nevertheless, the combined contribution possible from a variety

of renewable sources i s not to be taken l i g h t l y .

4.2.2 Hydropower. N.A.

4.2.3 Combustible resources. The sol id waste disposal s i te on Guam

(Ordot l a n d f i l l ) , i s rapidly approaching the point of maximun capacity,

29

despite a leveling-off of the rate of waste accumulation. The Government

of Guam i s committed to implementing alternative waste disposal methods, of

which refuse incineration appears to be the most attractive. With the

coordination of the Guam Envirormental Protection Agency (GEPA), the Taisei

Corporation of Japan has submitted a proposal for an incineration plant to

be constructed on Cabras Island at a cost (including $5*1 mi l l ion financing

charges) of $29.2 mi l l ion . Based on collection and processing of 200

tons/day of refuse, net base load e lect r ica l power available for sale i s 2*7

MW, or 19,129 Mfh annually at the assumed 80 percent load factor. The

plant i s to be operated by the Guam Power Authority under a turn-key

project arrangement with Taisei .

The economics of the project, at least when evaluated on financial

terms ( i . e . , without consideration of the external benefits of health and

environmental protection), are dependent on a number of assunptions which

w i l l be briefly reviewed here. F i r s t , the participation of the military

(counted for 50 tons/day) i s not assured. When faced with tipping fees of

$27/ton, the military may well choose to continue using existing dtmp sites

on Anderson AFB or develop new sites. Garbage collected from the c i v i l i a n

sector i s figured at 150 tons/day and i s projected to rise 2 percent p .a . ,

although this trend i s contrary to recent experience. Final ly , and most

curiously, project revenues frcm elect r ic i ty sales are computed on the

basis of 8.8 cents per unit, although stated GPA policy i s to purchase

power frcm qualifying alternative energy f a c i l i t i e s at 4.5^/kWh (GPA's

computation of avoided cost). The explanation for the dual sets of prices

i s that since GPA i s operating the f a c i l i t y , the u t i l i t y i s essentially

se l l ing power to i t s e l f and the transaction i s an accounting transfer

internal to the government. The mission i s not in favor of this energy

30

planning procedure, as i t distorts the economic values of energy resources

and sends the wrong signals for pr ior i t iza t ion of resource development (see

section 6.3.3). Better jus t i f ica t ion than a resort to inconsistent prices

may be found in environmental cost/benefit analysis. Even i f the refuse

incineration plant i s not financially viable at the 4.54/kWh valuation

(which i s probably too low), i t i s l i ke ly supportable for the provision of

envirormentally benign waste disposal services. The Government of Guam has

reached th is conclusion and i s actively seeking necessary financing and

permits, as wel l as a commitment for mili tary participation. At th is

wri t ing, i t i s not known i f these arrangements can be completed before

expiration of tax credits which significantly enhance the project's

attractiveness to private investors.

4.2.4 Gasifiers. N. A.

4.2.5 Steam newer systems. Following a review of studies by Mayer

(1982, 1983) and Brewbaker and MacDicken (1982), the mission has prepared a

preliminary estimate of costs of e lec t r ic i ty production for direct bicmass

(plantation leucaena spp. or similar) combustion in standard

boilep-turboalternators. The plant size examined, 5 W, reflects

l imitations on available land as discussed in section 4.1.2. Should Guam

land use policies change, scaled-up versions could be considered but with

relat ively small impacts on the per unit production cost. The mission's

analysis i s based on more pessimistic assumptions than employed by

Mayer/Brewbaker. In particular, overall plant efficiency i s assumed to be

lower (15 vs. 22 percent), wood yields s l ight ly lower (25 vs. 30

BDT/ha/yr), and capital costs higher ($2,000 vs. $1,100 per instal led kW).

The capital cost component i s based on recent quotes for wood-fired systems

31

in the Cook Islands and Papua New Guinea, and is amortized over 20 years instead of the 30 years used in the earlier estimates.

Previous studies concluded that plantation-based biomass power for

Guam baseload application i s marginally feasible to infeasible. Based on

an economic cost of production comparison, the mission's conclusion i s on

the negative side of this range. Steam power at the busbar i s calculated

at 13-7 /kWh, while GPA's 1984 average cost of production frcm i t s

oil-fired equipment i s 9*3£AWh (see Appendix 4.2.5). Based on less

quantitative assessments of competing land uses, local energy planners have

concluded that the biomass option i s not feasible for the foreseeable

future. The mission concurs with this assessment and considers large-scale

bicmass systems a lower-priority energy initiative for Guam. Should

military lands open up for co-use, Guam's deepwater harbor and access to

Japan make a woodchip export industry a more likely target of intensive

bicmass cultivation (Khamoui 1981), and this factor alone makes continuing

yield/species t r ia ls worthwhile. However, no further action i s recommended

unless conventional energy prioes rise to the point where economic

equivalence with the bicmass energy alternative i s established.

4.2.6 Coconut o i l in diesel engines. N.A.

4.2.7 Wind energy. In the mission's opinion, the history of wind power

development in Guam reflects planning based on an inadequate knowledge base

and decision-making overly influenced by local politics. The results can

be summarized as inaction and discouragement on the part of the private

developers and supporters in the GovGuam executive branch, and the passage

of a highly restrictive alternative energy law by the Legislature as a

blocking move. Both the overzealous promotion of (in part motivated by the

fast approaching expiration of alternative energy investment tax credits)

32

and the opposition to large-scale wind energy development in Guam are unfortunate, as preliminary data indicate seme exploitable wind potential on the islands central-eastern windward slopes. It i s worthwhile to review events to date.

The proposal for windmill farm development originated with the

Natural Energy Corporation, a division of Solar Energy Technology Systems,

Inc. of Bethesda, Maryland. NEC proposed an i n i t i a l 10 Mrf installation of

HhE Windmaster generators at the Windward Hi l l s site, in cooperation with

Electrowatt of Switzerland. Future plans included an upgrade to nearly 100

Mrf as feasibility was proven. Sale of power to GPA was to be governed by a

power purchase agreen ent that set out conditions, technical interface

requirenents, and buying rates for the wind- (and other alternate source

such as solar and biogas) generated electricity. A number of these terms

and conditions bear brief (but crit ical) examination as follows.

Pcwer deliveries. Under the purchase agreement, GPA would be

committed to accepting no less than 48,000,000 kWh annually, while "the

sole consequences to NEC resulting frcm an inability to produce as much

electricity as i t estimates from i t s faci l i t ies during any given time or

times during the duration of this agreement w i l l be the loss of revenues

resulting from i t s lessened electricity deliveries to GPA." For a 10 tW

installation, 48 GWh annually represents a 55 percent capacity factor. How

NEC expects to achieve this level of performance i s unclear, and there are

no penalties to NEC for not meeting the target. NEC's estimates of wind

energy output are, according to knowledgeable sources, based on

measurements made by Electrowatt over a three month period at the Windward

Hi l l s site which were correlated with data frcm lew-lying areas. Wind

speed and wind-duration estimates thus obtained have not been released and,

33

as mentioned in section 4.1.8, GPA has no independent basis for estimation.

It i s therefore impossible for GPA to assign peak demand coincidence or

probability of loss of load factors which are necessary for proper

valuation and future generation planning. Given these information gaps, i t

i s not true that adverse financial impacts from under-performance w i l l be

borne solely by the private investors in the wind farm, who may also have

tax-sheltered investment incentives unrelated to actual energy production.

Negative financial impacts would also be felt by the GPA management and

consumers i f , as the result of unavailability of planned-for wind energy,

funds have to be expended to bring higher marginal-cost energy sources

on-line. More importantly, from a social/economic planning perspective, a

failed windpower project may negatively bias future alternative energy

development and may thus be associated with very high opportunity costs.

Typhoon resistance. The issue of the wind generators' ability to

resist the 150-pius mi/hr winds which strike Guam at approximately decade

intervals has not been addressed in the proposal. The implied solution,

contracting for private insurance, i s really only applicable to NEC and i t s

investors. The foregoing argument about the divergence of the

financial/economic interests of NEC on one hand, and GPA and i t s customers

on the other, applies.

Grid stability. Given the IWPS peak demand of about 150 Mr/ and

the slow load-following characteristics of the Cabras regenerative re-heat

stean generator units, early suggestions of integrating 100 Mrf of

interruptible wind power with the IWPS grid are inexplicable. This i s

recognized in clause 4 of the April 1985 version of the NEC proposal, which

suggests 10 percent of peak demand as the target level to be supplied by

wind generators.

34

Avoided costs. The proposal states that GPA w i l l pay for NEC

electricity at GPA's " fu l l avoided cost," and that NEC's faci l i t ies shall

be considered "new capacity," This i s oorrect as far as i t goes and in

accordance with PURPA guidelines (which are not strictly applicable to GPA

because of i t s sales of less than 500,000,000 kWh/yr) and provide a basis

for negotiation of buying rates. However, in the absence of wind data and

time-of-day, seasonal, or off-peak/on-peak pricing schedules in the

proposed contract, i t i s unclear how capacity credits are to be determined.

GPA has thus taken a conservative position of essentially allowing no

displaced capacity credit and i s therefore offering a marginal fuel-only

avoided cost of 4.5*/kWh. In the GPA calculation, the high-efficiency 66

MW Cabras units, not the lcwer-efficiency 26.5 W Tanguisson units, are

considered the marginal units. This i s because of spinning reserve

requiranents of the IWPS (in dispute with the Navy) and load-following

characteristics of the generation units; one of the Tanguisson units i s run

base-loaded and one or two of the Cabras units are added to meet base or

intermediate load demands. For i t s part, NEC originally requested over 18

cents per delivered kWh; this figure i s down to 8.8*/kWh in the April 1985

proposal.

Financial analysis. At the behest of NEC, Coopers and Lybrand in

Washington, D.C. prepared a preliminary comparison of GPA cost of

production by oil-fired sources with a base year (1986) buying rate for

NEC-produced electricity of 13.8*/kWh. GPA production costs include a fuel

component (6.7*) based on residual fuel o i l at $33.74/bbl, an 0*M component

(1.6*), and a depreciation and interest component (2.5*), giving a total

production cost of 10.8*/kWh. Project l i f e i s assumed to be 30 years, the

price of fuel o i l i s inflated at a four percent real annual rate, 0*-M at 10

35

percent real, and capital charges at four percent real, adding up to a five

percent annual real increase in GPA production costs. The price of

NEC-provided electricity i s held constant in real terms. Under these

assumptions, i t i s not surprising that the NEC power purchase shows a 33

percent internal rate of return for GPA. However, the assumptions predict

an absurd 2016 fuel o i l price of $109.43 per barrel in real (1986) dollars,

or $588.74 in nominal terms. If fuel switching and the availability of

substitutes such as coal and even synfuels at $50-6Q/bbl are to have any

significance, then the o i l price scenario thus described i s not to be

believed. In sun, the assumptions made in the January 1985 analysis were

unrealistic, and even more so when perfect hindsight reflecting 1986 o i l

prices i s applied.

With the expiration of the alternative energy investment tax

credit, private sector interest and activity in wind power development have

subsided. This should not stop the Government of Guam and GPA from further

defining the wind power resource and economics. In particular the present

Guam "Ten Year Alternate Energy Plan," to be discussed in section 6.3.3*

does not provide adequate financial incentives nor evaluation criteria for

future wind farm proposals. The creation of a consistent framework for

decision-making for projects of the NEC type w i l l help prevent the fate of

future such initiatives from being decided in a politically-charged battle

between the governor and the Legislature.

4.2.8 Geothermal. N. A.

4.2.9 iZIEC. The Government of Guam is strongly committed to the concept

of an OTEC plant and there i s adequate land available for a shore-based

plant on Cabras Island. Expectations ran quite high when the government

entered into an agreement with International Energy Enterprises to design

36

and construct a 5 W unit, expandable to 10 Mrf- Attempts to obtain private

financing for this development were unsuccessful, a consequence of the lack

of commercial viability of the technology. The mission recommends that the

government continue to closely monitor OTEC developments, particularly in

Hawaii. As OTEC technology approaches technological and economic

readiness—perhaps in the next century, Guam may yet prove to be a site of

choice for demonstration or commercialization.

4.2.10 Biogas. N. A.

4.2.11 Alternative petroleum fuels. N.A.

4.3 Small Power Systems

4.3.1 Overview. This section includes demands that can usually be

satisfied with less than 5 kW of installed peak capacity to serve end-uses

such as household lighting and communications. Because of the high

percentage (98 percent) of homes presently supplied by the centralized grid

on Guam, total demand in this village and outpost sector is very small.

The market for alternative energy systems in this sector i s quite similar

to that found on the U.S. mainland—microwave repeaters, farms, and

off-grid houses owned by those who do not want to be.bothered by the noise

and OfM requirements of anall diesel sets. Until recently, the latter

category of consumer could instal l a photovoltaic (PV) system, for example,

with 40 percent subsidy frcm the Federal Government. Even with the.

expiration of the tax credit, a number of homeowners are willing to trade a

higher effective price of electricity for the convenience and independence

of PV power.

4.3.2 Photovoltaic cells. The Guam Energy Office has a photovoltaic

demonstration project which powers a satellite VHF radio link. A nearby

GEO "energy house" also contains a FV demonstration system of about 400 Wp

37

for home lighting and fans. There are perhaps half a dozen other

FV-powered residences on the island.

4.3.3 Wind energy. Because of the frequency of gale/typhoon conditions

experienced and the marginal wind resource at lower elevations, small-scale

wind systems are not considered appropriate for electricity generation in

Guam. Application has thus far been limited to l i f t irrigation on

scattered farms, and there i s a 500 W equivalent water-punping windmill on

an aquaculture farm in the interior. The avoidance of electrical energy

storage considerably enhances wind pimping economics relative to

battery-tied systems, and the extra expense of collapsible/crank-up designs

for storm resistance may be justifiable for the small units.

4.3.4 Hvdropcwer. N. A.

4.3.5 fiasi£ien§. N.A.

4.3.6 Coconut o i l in engines. N. A.

4.4 Industry and Commerce

4.4.1 Overview. Unlike many other Pacific countries, both agricultural

processing and manufacturing are of relatively minor importance in the

total energy picture. Seme potential for substitution of indigenous energy

sources exists in the tourist and service industries, particularly in using

the solar resource for low-temperature water heating and food service

applications.

4 .4 .2 Gasifiers/hot^air generators. Industries employing medium-

temperature heat include hotels, laundries, bakeries, beverage bottlers,

and garment factories. Heat demands are mainly supplied by automotive

diesel o i l (ADO) combustion. A moderate-cost, proven technology exists for

using wood and wood wastes in heat raising applications: gasifier/hot-air

generators made by Waterwide in New Zealand. Unlike biomass gasifiers for

38

electrical generation, the wood gas i s secondarily combusted in a venturi,

thus drastically reducing wood tar accumulation and clogging. Exit

temperatures of 1,000°C can be achieved within 15 minutes using air-dried

wood feedstocks. Such units have replaced most diesel-fired cocoa drying

in Papua New Guinea. However, at least two factors limit the feasibility

of the hot air generators for Guam. First, high costs for even the

unskilled labor required to prepare and feed the wood fuel into the

gasifier make the economics of small-scale installations less favorable

than in other Pacific locations. Secondly, despite the presence of

abundant stands of local "tangantangan," the logistics and rel iabi l i ty of

supply of fuelwood is subject to uncertainty. The price required to induce

a regular supply may prove prohibitive.

4.4.3 Food industries. N.A.

4.4.4 Solar water heating/heat pumps. The major hotels employ

diesel-fired boiler/calorifiers for water heating. The bulk of this ADO

use could be supplanted by,solar water heating systems. It i s l ikely that

small collector farms connected under pressure to enlarged storage systems

could be retrofitted to existing hot water distribution networks. Smaller

guest houses and motels similarly benefit by an ploying individual

thermosiphon units; simple payback periods of less than five years are

indicated.

Industrial-size heat pimps represent another attractive

alternative for water heating in hotels, restaurants, food service

faci l i t ies , and light manufacturing concerns, particularly where electric

resistance heating units are employed. Typical units intended for

commercial application deliver 58,000 BTU/hr (17 kW) at a final water

temperature of 135°F (57°C). When operated in ambient temperatures typical

39

of Guam, coefficients of performance (COP) of heat pimp units approach 3.0,

or a two-thirds reduction in energy consumption relative to standard

electric heaters. An additional benefit of heat pimps, which are commonly

but incorrectly described as "a refrigerator run in reverse," i s the

cooling and dehunidifying effect of source (rejected) air. The 3.5 HP

compressor unit described herein provides average cooling of 40,000 BlU/hr.

The larger hotels use diesel boilers to supply both low-

temperature (room water heating at ~45°C) and medium-temperature

(kitchen/laundry wash water at ~65°C) needs. It i s recommended that the

magnitude of these separate demands be determined, with a view towards

isolating that part of the circulation systan which actually requires the

higher-tenperature water. Low-temperature needs may thus be feasible for

supply by direct solar or central air conditioner chiller waste heat

recovery methods, while higher-grade demands may be met by heat pump or

conventionally fuelled methods.

4.4.5 Wood and charcoal stoves. Institutional cooking demands are met

by LPS, electricity, and, on occasion, charcoal for tourist barbeques.

Wood at $15 per green ton i s one-third the cost of electricity and one-half

the cost of LPG for cooking. Where instantaneous cooking heat is not

required, large slow-combustion wood stoves have proven suitable at

institutional kitchens in Western Samoa (including two major hotels), the

Solomon Islands, and F i j i . Efficient commercial-sized, solid-fueled units

available in Australia also provide hot water through a water jacket at the

backs of the stove. However, i t i s likely that hotels w i l l express

reluctance to use slew-combustion stoves for cooking even though modem

designs include clean, attractive vitreous enamel facing with lowered room

40

heat loads. Regularity of wood supply.concerns w i l l be an additional

discouraging factor.

4.4.6 Crop drying. N.A.

4.4.7 Biogas. The Guam Energy Office has sponsored workshops for pig

and chicken raisers to demonstrate methane gas and fer t i l izer production

from animal wastes. The nunber of such installations i s small and the

total contribution of biogas to Guam's energy supply is not significant.

Cultural and economic conditions l imit on-farm application of this

technology9 and installation of a methane recovery system at existing

community sewage treatment faci l i t ies would be uneconomic.

4.4.8 Other. N.A.

4.5 Transportation

4.5.1 Overview. For motor vehicle transportation, there is ,

unfortunately, l i t t l e prospect of near^term alternatives to petroleum1

fuels. Ethanol production in other countries takes advantage of large

economies of scale, and even then remains financially viable only through

government subsidies justified on import security and foreign exchange

considerations.

4.5.2 Ethanol fuels. N.A.

4.5.3 Coconut o i l in diesel engines. N.A.

4.5.4 Biogas. N.A.

4.5.5 Producer gas. N.A.

4.5.6 Wind energy. N.A.

4.6 Households

4.6.1 Overview. The domestic sector i s the third largest consumer of

electrical energy on Guam, behind the military and commercial sectors, and

accounts for 37 percent of non-military electricity use. Direct use of

41

petroleum fuels i n households i s small. However, about 47,000 of the

64,497 registered vehicles (1983) are used for personal transport, and

therefore domestic demands constitute a substantial portion of the total

Guam energy picture.

4.6.2 Patterns of energy use. Major household e lec t r ic i ty uses are, in

order, a i r conditioning (40 percent), water heating (30 percent), cooking,

refrigeration and l ight ing (30 percent). Elect r ic i ty i s the dominant

cooking fuel, as shown in the following s ta t i s t ics from the 1980 Census:

Cooking method # of households %

Electr ic stove 21,726 77

Gas (LPG) 4,984 18

Other (wood) 610 2

Kerosene 267 1

None 504 2

28,091 1001

Average LPG consumption in households using bottled gas for cooking

purposes i s estimated at 35 lbs/mo. When combined with sales data from the

two retai lers, evidence suggests that the number of households cooking with

LPG has risen to 7,500 in the intervening five years. Wood i s the cooking

fuel of choice of only the poorest or off-grid households, although many

island families cook outdoors over open "tangantangan" flames perhaps twice

per month. Kerosene i s used as a back-up fuel during power outages and

typhoons.

42

A comparison of cooking costs (Appendix 4.6.2) shews that cooking

with LPG i s approximately one-third cheaper than with e lec t r ic i ty , which

part ia l ly explains the growth in popularity of th is fuel . Previous to the

closure of the GORCO plant, LPG was available as a by-product of the

on-island refinery at s l ight ly more than half current prices. Should GORCO

resune refining operations at seme future point i n time, the price

advantage of LPG w i l l be compelling. However, due to their present

e lec t r ica l generation overcapacity, GPA finds i t f inancially advantageous

to recover fixed costs by se l l ing greater e lect r ic i ty volunes and thus has

not encouraged LPG substitution.

A i r conditioning has come to be seen as a near necessity i n

middle- to upper-income island hemes, as evidenced by these 1980 Census

figures:

A i r Conditioning Method # of Households I

Individual roan units 11,223 40

Central a i r 5,567 20

None 11,301 40

28,091 1001

Degree-day heat loads and humidity levels do not substantially exceed, and

in seme cases are less than, those found in other Pacific islands. Use of

cei l ing air^-circulation fans i s uncommon. Energy-efficient architecture i s

hampered by typhoon-resistance requirements, but efficiency improvement

opportunities do exist—as w i l l be discussed in section 7, Energy

Conservation and Management.

43

4.6.3 Wood and charcoal stoves. Numerous efficient wood stove/oven designs are available i n the Pacific for local adoption. However, discussions with residents indicated that present cooking styles and attitudes are sufficiently entrenched so as to render a major shift to wood-fired cooking impossible. Efficient charcoal stoves would probably be met with better acceptance, but present imported charcoal prices (about 35*/lb) make this option uneconomic for expansion on a large scale.

4.6.4 Other cooking aspects. N.A.

4.6.5 Solar water heating/heat pumps. The 1980 Guam housing census

determined that approximately 80 percent, or 17,725, of Guam's 22,155

housing units are equipped with a water heating device. Of these, an

estimated 1,600 are LPG operated and another 500 are solar heated. The

balance i s e lec t r ic resistance units, which at one time consumed 40 percent

of domestic e lec t r ic i ty use. Recent e lect r ic i ty price rises have induced

conservation and curtailment; the Guam Energy Office estimates that a th i rd

of those using e lect r ic water heating have drastically reduced or turned

off consumption through lowered thermostats, timers, or disconnection. The

share in domestic use i s thus down to 30 percent, a substantial amount

nonetheless. A solar energy and conservation assistance program funded by

the U.S. Department of Housing and Urban Development provides a 40 percent

or $1,000 subsidy, whichever i s smaller. Typical installed cost of a

single household solar domestic hot water system (SDHW) i s thus reduced

frcm $2,250 to $1,350. Simple payback times of under four years result

when the domestic consumer t a r i f f rate i s applied (see Appendix 4.6.5a).

Benefits frcm SDHW retrofi ts are substantial and include reduction in total

e lectr ic i ty demand and, considering the high instantaneous rate of

resistance heater energy consumption (4.5 kW/heater for 15,000 heaters

44

equals 33 MW i f demand coincidence approaches 50 percent), a large

reduction in peak load. Maximum reduction in peak demand w i l l result i f

e lec t r ic i ty i s disconnected as a back-up source for water heating. The

u t i l i t y can further assist house occupants i n meeting the cost of these

ret rof i ts by acting as a financing agent, as has been done in Northern

California. Under one such scheme, a cei l ing e lec t r ic i ty usage level i s

established by averaging meter readings for six months prior to SDHW

ins ta l la t ion . Subsequent savings from solar water heating are then used

for capital service. As an alternative, consumers can pay a monthly fee

based on ten-year repayment of the solar system, incorporated i n the

e lec t r ic i ty b i l l . The fee w i l l , in most cases, be less than the present

cost of e lec t r ic i ty for water heating.

Tank-mounted integral heat pimp units can be readily retrofi t ted

to resistance-type domestic water heating units. Although benefits in

terms of reduced e lec t r ica l energy consumption and peak loads do not equal

those of SDHW, they are nonetheless substantial. Total energy demand i s 33

percent, and peak dra* 40 percent, of that of standard water heaters.

Considering household demand for a i r conditioning, the additional benefit

of 8,500 BTU/hr of cooling i s an important consideration. Cost FCB

Honolulu of a residential size heat pimp i s $1,750; households of less than

150 percent of median area income are e l ig ib le for a 40 percent subsidy

under the Solar Bank program. Furthermore, bulk purchasing should result

in substantial prioe declines. The mission recommends widespread promotion

of this proven technology, perhaps in conjunction with a u t i l i ty-ass is ted

financing schene as described above. The U.S. military i s already a major

on-island heat pump user.

45

5 PETRCLEUM AND FOSSIL FUELS

5.1 Supply and Storage

5.1.1 Present supply patterns. With the exception of residual fuel o i l

(RFO-6), ground and aviation fuels are supplied by Mobil and Exxon from the

Jurong refineries (substantially company owned) in Singapore. Fuels are

shipped v ia mediun-range tankers to bulk storage f a c i l i t i e s located on

Cabras Island in Guam's Apra Harbor. RF0-6 i s the primary fuel for

e lectr ical generation and has been supplied by Coastal (Bermuda)

Ltd. /Pacif ic Eastern Petroleum L t d . , represented on-island by Petrcmar,

Inc. The loss of a major U.S. military supply contract fcreed the closure

of GORCO's refining operations in March 1984. U.S. military fuel

requirenents are now met by direct import of refined products from the

Shell and Caltex Refineries i n Singapore through the U.S. Navy supply

system. The bulk of GORCO's stcrage capacity i s presently leased to the

Naval Fuel Depot, Guam. However, GPA retains sole procurement authority

for generation fuels for the island wide-power system, which serves both

c i v i l i a n and mili tary demands. The rsnainder of GORCO's storage capacity

i s used for bulk storage of LPG and bunkering fuels.

5.1.2 Future supply. The supply of fuel o i l for the island-wide power

system has remained the most controversial element i n Guam's petroleum

supply picture. The lowest of four bidders when GPA last awarded a

multi-year o i l supply contract in 1982 was described by the Guam

Legislature Energy Committee chairman as a "middleman," thus bringing into

question the openness and extent of competition in the tendering process.

With the present fuel o i l contract to expire i n June 1986, the power

authority began so l i c i t i ng requests for proposals frcm 72 o i l vendors in

May 1985. Fourteen responses from qualified firms were received,

46

indicating more competitive conditions in the Asia/Pacific fuel market than

previously existed. However, GPA's contracting procedures have again come

under cr i t ic ism in the Legislature, with objections stemming frcm the RFP

(request for proposals) rather than tender/bid process employed. Under the

RFP format, o i l suppliers are free to propose source, shipping schedules,

payment terms, quality assurance procedures, and other conditions

responsive to the basic RFP requirenents. In a tendering/bid arrangement,

terms and conditions are ful ly specified and fixed in the so l i c i t a t ion ;

competition i s thus s t r i c t l y on price. The mission shares the

Legislature's concern over the efficiency and potential for abuse in the

open proposals procedure. In addition, the current practice of awarding

five-year contracts i s unfavorable to GPA in present o i l market conditions.

The mission suggests one to two years as the appropriate renegotiation

period.

Supply of gasoline, autanotive diesel o i l (ADO) and aviation fuels

i s roughly evenly s p l i t between Mobil and Exxon, although the exact size of

their market shares i s priviledged information by virtue of Federal

anti-trust legis la t ion. In practice, experience in other Pacif ic markets

served by two or three suppliers suggests that competition i s less than

perfect in these isolated markets. At the time of the mission's v i s i t , the

Legislature was preparing background information for hearings on petroleum

product pricing in Guam. The findings of these hearings were not available

as the mission report was being prepared.

5*1*3 Fuel storage. Non-military bulk storage in Guam i s located on and

adjacent to Cabras Island on land long-term leased frcm the Guam Economic

47

Development Authority (GEDA) and the Navy. Total tank capacity and demand coverage (based on average 1984 demand) are as follows:

Capacity ('000 bfals)

Mobi l 3 Exxonb GPA GORCO0 GAAd Demand Coverage

Di s t i l l a t e (ADO) 94 6 140 days

RFO 18 - 556 194 days

Motor sp i r i t 110 87 - - - 84 days

Jet fuel K (A-1) 105 82 45 104 days

Marine diesel o i l 330 247 days

Notes: a Two-thirds Port Authority owned b Port Authority owned c Balance of 4.13 MMbbl GORCO Storage leased to military d Guam Airport Authority

Estimation of demand coverage has been corrected for Mobil Oi l Micronesia

deliveries transshipped at Guam.

5.1.4 Future arrangements for fuel storage. N.A.

5.1.5 Local marketing and distribution- Internal bulk distribution of

gasoline and ADO i s handled by Mobil and Exxon from their f a c i l i t i e s on

Cabras Island in Apra Harbor. Both companies also provide fuel to the Guam

Airport Authority tankage at the international a i r terminal. Mobil and

GORCO operate fueling piers for tanker off-loading and bunkering fuel

provision which Exxon shares under cooperative agreements.

Retail sales of gasoline are made at 24 service stations, of which

nine also market auto diesel fuel . During the mission's v i s i t prices for

unleaded regular grade gasoline ranged from $1.47 to $1.57 per gallon, with

the cheaper price prevailing at the primarily company-owned Exxon outlets.

48

Liquif ied petroleum gas sales are handled by Island Equipment Company and

Mark's; the la t ter offers a domestic delivery service at a surcharge of

7*/lb.

5.2 Pricing and Price Control

5.2.1 Price composition. The main elements in the build-up of the price

of gasoline and automotive diesel o i l from refinery to r e t a i l consumer,

based on prices as of September 1985, are shown below. FOB Singapore

prices are based on refinery postings.

Gasoline Auto diesel

(cents/gallon)

FOB Singapore 82.2 73.5

Freight to Guam 3.6 4.1

Insurance 0.1 0.1

Ocean loss 0.5 0.2

Wharfage—Guam 0.3 0.3

Taxes (local and Federal) 11.0 10.0

Interest on working capital 1.8 1.6

Distribution expense and o i l company 26.5 30.7 return

Wholesale price (delivered) 126.0 120.5

Retailers' gross margin 22.1 23.1

148.1 143.6

49

The on-island price build-up for LPG i s as follows:

LPG

(«5/lb)

ex-GORCO 35.0

Wholesale price 45.2

Retail margin 1.8

47.0

5.2.2 Duty. As a non-sovereign state, the Territory of Guam does not

possess the right to independently levy import duties on POL or other

products.

5.2.3 Price control- No price control measures on petroleum or other

products are in effect, nor are any contemplated far the future.

5.2.4 Price monitoring and negotiation. The Guam Energy Office compiles

a l i s t i n g of re ta i l gasoline and auto diesel (rices and publishes th is

information i n i t s quarterly newsletter. On a national planning leve l , the

mission does not consider the Guam Power Authority's access to and

familiarity with information on Asia/Pacific market trends to be

commensurate with i t s important role as negotiating agent and importer of

over $25 mi l l ion of fuel o i l annually. Relatively simple measures such as

subscription to an o i l market monitoring journal are l i ke ly to produce

significant returns. Along this l ine , the mission applauds recent efforts

by the Guam Legislature to gain a greater understanding of the price

elements and extent of competition in the local o i l industry.

5.2.5 Local marketing and distr ibution. N. A.

5.3 Resource Development

5.3.1 Overview- There i s no known or anticipated petroleum resource on

Guam or surrounding waters.

50

6. ELECTRICITY

6.1 Insti tut ional Arrangement.

6.1.1 Overview. The production and distr ibution of e lec t r ic i ty on Guam

i s the jo in t responsibility of the Guam Power Authority (GPA) and the U.S.

Navy. In 1972, the Navy and the Authority entered into a formal agreenent

providing for the pooling of power generation and transmission f a c i l i t i e s

and the prorated sharing of costs. Navy-owned f a c i l i t i e s include 67 MW of

steam boiler capacity constructed in the 1950s and 1960s, 12 Mrf of stand-by

diesel , plus 90 of the 122 miles of distribution l ines . GPA f a c i l i t i e s

underwent rapid expansion since the Authority's creation as an autonomous

agency of the Government of Guam in 1968. GPA-owned capacity presently

comprises 185 Mrf of stean turbines put on-line in the early to mid 1970s,

20 Mrf of back-up diesel, and the balance of the distribution systen. Under

the pater pool arrangement, GPA and the Navy jo in t ly generate power at

their respective plants which are dispatched by the Navy's Public Works

Center (a duplicate, but not yet in service, load control center was bu i l t

by GPA i n anticipation of the termination of the power pool agreement).

Power i s sold by GPA to i t s c i v i l i a n customers on a commercial basis at

rates intended to provide the Authority with self-sustaining finance.

Costs associated with Navy ( i . e . , military) power consumption are

reimbursed to GPA based on a controversial negotiated formula which

includes fuel cost, OfM, and amortization (annuity plus debt service

coverage) components. When the power pool agreement was or iginal ly

formulated, i t was to be a short-term arrangement to permit GPA to

demonstrate i t could successfully operate the systen and eventually take

over operational control of the entire island-wide power systen (IWPS).

Navy and other Department of Defense installat ions would then become

51

customers of GPA, following practice in other jo in t m i l i t a r y / c i v i l i a n

jurisdict ions of the United States, This transfer of operational

authority, which could have taken place as early as 1975, has been delayed

repeatedly. The power pool agreenent remains in force amid claims that the

arrangement i s detrimental to GPA interests, has caused GPA financial

d i f f i cu l t i es , and results in Guam's c i v i l i a n population subsidizing the

power costs of the military establishment. While acknowledging GPA's

operational capability in most areas except transmission and distribution

(T&D) system maintenance, the Navy has been reluctant to relinquish control

based on GPA's financial d i f f i cu l t i e s . The Authority has twice experienced

near bankruptcy since 1975 and has required Federal Financing Bank loan

guarantees to attain a measure of financial s t ab i l i ty . Inadequate rate

structures, undercapitalization, a deteriorated regulatory climate and

rapidly inflat ing o i l prices have a l l contributed to a rough decade for the

Guam u t i l i t y . These negative factors have been substantially reversed in

the last 18 months. However, recent procurement scandals involving GPA

management indicate that troubles for the Pacific islands' largest e lec t r ic

u t i l i t y are not over.

6.2 The Power System

6.2.1 Generation system. Vir tual ly 100 percent of e lec t r ic i ty output i s

generated by boiler/stean turbines f ired by residual fuel o i l . Following

U.S. practice, service voltage i s 120/240 V and 60 Hertz. Approximately 77

percent of gross generation i s accounted for by the 66-Mtf-each Cabras 1 and

2 units. At 34 percent efficiency, these generators are among the top

twenty most efficient oil-fueled generators under U.S. jur isdic t ion. The

balance of generation takes place at the Tanguisson and P i t i plants at

considerably lower gross efficiencies, about 23 percent. Some

52

1,833,000 bbl of RFO were consumed for e lec t r ic i ty production in 1984. The

low-speed diesel generators are used for back-up during unscheduled outages

and, in the same year, consumed less than 8,000 bbl . Installed and firm

capacities of 284 and 180 W, respectively, are more than adequate to meet

present peak demands of 150 W. Complete s ta t i s t ics on the IWPS generating

capacity are given in Appendix 6.2.1.

Forecasting load growth on Guam i s tricky business due to the

unpredictability of military ac t iv i t ies and cyc l i ca l unsteadiness of the

island economy. An updated, formal load forecast had not been prepared by

GPA and was thus not available to the mission. Informally, however, the

GPA reduced sales scenario discussed in Stone and Webster's 1982 cost of

service study seems to be the operative assumption. The forecast predicted

that sales w i l l continue to decline un t i l 1984 and then begin to rise at a

1.8 percent annual rate thereafter. The further implied assumption i s that

demand for power (capacity) w i l l move in step with demand for e lec t r ic i ty

(energy), or that load curve flattening measures w i l l have only a small

effect.

6.2.2 Transmission and distr ibution. The present distr ibution system

consists of 115/34.5 kV primary and 13.8 kV secondary feeders. Due to wood

rot and termite infestation, wood pole l i f e i s half of normal design l i f e .

Coupled with the dense vegetation, outages in the secondary system are

relat ively frequent. To address this problem GPA began a $9.8 mi l l ion

federally funded pole-hardening project in 1983. In the i n i t i a l phase, 500

wood poles w i l l be replaced with concrete poles having a 40 to 50 year

estimated l i f e . Significant savings in T&D maintenance should result when

the pole replacement project i s complete. Plans to loop the island with a

115 kV feeder w i l l improve system r e l i a b i l i t y but are l ike ly to be economic

53

only in the long run. Present l ine losses at 10 percent are somewhat high

but tolerable.

In 1984 GPA had 22,155 residential, 2,829 commercial, and 764

government customers. Metering, b i l l i n g , and collections are the

responsibility of GPA. Losses due to unbilled connections were about three

percent in 1984, principally due to unmetered streetlighting connections.

6.3 Planning Issues

6.3.1 Overview- Rapid o i l price increases of the previous decade had

the obvious effects of increasing GPA's variable production costs and, as

incorporated into the t a r i f f structure, imposing a cost of e lec t r ic i ty

burden on consumers that reached the l imi t s of their willingness to pay.

Less obvious was the effect these price increases would have on demand and

sales. Price-induced declines in consumption occurred in each year from

1980 to 1982 and, in common with many mainland u t i l i t i e s , GPA soon found

i t s e l f in a situation of overcapacity. Attempts to h i t revenue targets

necessary to meet debt service further depressed sales and further

increased fixed costs per delivered kilowatt^hour. The resulting downward

spiral was called a "catch 22" situation on the floor of Guam's Legislature

and gave rise to suggestions of lowering t a r i f f rates, a move that would

improve GPA's financial condition only i f the long-run price e las t ic i ty of

e lect r ic i ty was greater than one, a doubtful circumstance.

Although the declining demand situation has reversed i t s e l f since

1983, the above events i l lus t ra te the importance of demand estimation and

of understanding the component factors that determine demand. While data

requirements are large, much of this data already exists for the domestic

sector in the form of the household energy survey conducted by the Guam

Energy Office. The mission recommends that the GEO complete compilation of

54

the data collected from 4,000 households in 1984/85 and present the results

to the GPA for further analysis.

Island leaders and u t i l i t y management personnel are of the opinion

that because of rapidly changing economic conditions and the susceptibil i ty

of the Guam economy to external events, demand forecasting i s nearly

impossible. While acknowledging the d i f f i cu l t i e s Guam's planning

environment presents, the mission cannot subscribe to this view. Load

forecasting i s the f i r s t and fundamental step in the i terat ive generation-

planning exercise consisting of a range of demand projections, e lectr ic

system modelling, capacity expansion decisions, consumer preference input,

and assessment of impact on consumers. While GPA cannot be expected to

attain the level of predictability found in much larger mainland u t i l i t i e s ,

the v o l a t i l i t y of today's energy market demands a planning-skills upgrade

i f financial s tabi l i ty i s to be achieved. The mission was favorably

impressed by GPA staff s k i l l s i n generation systen engineering and

technology assessment, but believes a shortfal l exists in the e lec t r ic i ty

economics area. Assistance i s available from U.S. u t i l i t i e s (GPA has

previously obtained t a r i f f revision advice from the Hawaiian Elec t r ic

Company) and private consulting organizations, and in the form of modelling

prograns frcm the u t i l i t y industry (same of which can be run on affordable

microcomputers). In addition, consideration should be given to the

appointment of a qualified economist/planner to the staff of GPA.

6.3.2 Options and recommendations. The mission has prepared a simple

analysis of future peak demand vs. available capacity (Appendix 6.3.2)

based on an assumed 1.8 percent annual power demand growth rate. The

results are variable depending on what additional assumptions are made

regarding future termination of the power pool agreement and relegation of

55

the Navy's aging P i t i 3 and 4 units and diesels to standby/emergency

status, as recommended in the 1983 Touche Ross rate audit. However, i t

appears that new capacity w i l l be required scmetime in the mid-1990s both

to replace aging plant and to lower the costs of generation of the marginal

units. The Tanguisson and P i t i plants have a 40 percent higher fuel cost

than Cabras, yet because of load-following and spinning reserve

requirenents at least one turbo-generator operates in a baseload mode and

accounts for a significant fraction of total generation.

The renewables options have been reviewed in section 4, and the

basic conclusion i s that no large-scale indigenous source of firm power

w i l l be available ten years hence to fully close the supply/demand gap that

mav exist at that time. Demand management and a combination of renewable

sources w i l l make an important contribution that has thus far been limited

by inst i tut ional and economic barriers. GPA has taken a conservative but

perhaps r ea l i s t i c view in concluding that new conventionally f ired capacity

represents the least cost expansion/ replacement alternative. The option

favored, transformation of the Tanguission No. 2 unit into a 77 MW dual gas

turbine combined-cycle systen, w i l l provide high efficiency (39 percent),

and good operational f l e x i b i l i t y . Cost for this conversion was estimated

at $38 mil l ion in 1982, or $494 per installed kilowatt. In the absence of

a crystal ba l l concerning future o i l prices, the mission concurs with the

Authority's plan. New conventional wisdom regarding the world o i l market

indicates, however, that the scheduled 1991 on-line date should be

reexamined for possible postponement.

Coal i s another option that has received serious consideration on

Guam. Low-sulfur Australian coal at $5Q/tonne CIF (October 1985) i s

approximately 60 percent the cost on a gross BTU basis ($1.89/MMBTU) than

56

RFO at $20/bbl ($3-32/MMBTU). Although coal supply, l i ke petroleum, i s

subject to supply disruption (e.g. , Australian port industrial disputes),

the world coal market i s much more stable than that for o i l for reasons of

greater total reserves and lesser geophysical concentration. Preliminary

studies on the conversion to coal at the Cabras Pcwer Plant have been

performed by Barrett-Harris, Gibbs & H i l l , and Walter Pinckert & Associates

(designers of the Cabras o i l - f i r e d plant). The proposed plan i s to expand

the existing 2 x 66 W plant by the addition of two 70 W coal-burning

stean boilers that would become an integral part of the Cabras generation

f a c i l i t y . The existing o i l - f i r e d stean boilers would be retained for

standby and emergency operation, as recommended in proposals for coal

supply made by TNT Bulkships. Queensland coal loaded at Brisbane would be

transported to Apra Harbor on self-unloading Panamax class (50-60,000 DWT)

dry bulk carriers at 3 to 5 week intervals. The 43 ft draft and 800 ft L0A

of these vessels can be accommodated at existing anchorages in Apra Harbor.

On-shore mooring and handling f a c i l i t i e s would have to be constructed,

however, as would a 1.5 mile-long conveyor system fa* steam coal transfer

to the Cabras yard 3-month stockpile occupying about 10 acres.

Cost of the entire conversion project, including coal receiving,

handling, transfer, combustion, and pollution control f a c i l i t i e s , has been

variously estimated at $100 mi l l ion (Pinkert 1983), $154 mi l l ion (GPA

1981), $260 mil l ion (BarretUHarris 1983), and $300+ mi l l ion (Guam Energy

Office 1983). Among the uncertainties in capital cost estimation i s the

level of pollution control that would be required. Guam i s subject to the

EPA New Source Performance Standards under the Clean Ai r Act, although the

Government of Guam was previously granted a waiver for the burning of

high-sulfur o i l at GPA plants. At the lower end of capital costs given,

57

the conversion project i s feasible; i n the upper ranges, debt service costs

negate probable fuel cost advantages over the l i f e of the plant. The

question of cost/benefit acceptability may be academic, however. Weak

financial performance over the past 10 years has seriously undermined GPA's

abi l i ty to enter public capital markets to secure the level of financing

that would be required. In the absence of new Federal financing,

implementation of the coal conversion plan i s unlikely before the mid

1990s. The local authorities are thus advised to monitor the experimental

burning of coal by Hawaii e lectr ic u t i l i t i e s , and to regularly reevaluate

the coal option in l ight of new price path information.

6.3-3 Other planning aspects. The passage of P.L. 17-77, the "Alternate

Energy Plan for Guam" Act, by the 1984 Guam Legislature impedes the private

generation and sale of e lectr ic power by alternative means. While the

intent of the b i l l ' s sponsors was to stop a hastily packaged windfarm

project, the Act affects development of the entire range of independent

pcwer sources. Specific provisions of the Act include:

(2) Any power produced or sold frcm alternate energy sources...

cannot be purchased by Guam Pcwer Authority or the Government of

Guam at a cost greater than the average cost of producing power

found in the islandwide power system...

(3) No contract may be signed by the Government of Guam or the

Guam Power Authority to develop or purchase power from alternate

energy sources... i f such contract w i l l result in increased

expenses and costs for the Guam Pcwer Authority. No such

alternate energy contract may be signed unt i l the board of

directors of the Guam Power Authority has so ce r t i f i ed . . . that the

58

price paid for e lect r ic i ty pursuant to the agreement does not

exceed actual current avoided cost.

The law blurs the dist inct ion between average and marginal costs, and

short-run and long-run costs, and violates the sp i r i t ( i f not the

letter—Guam i s excluded from jurisdiction) of the Public U t i l i t i e s

Regulatory Policies Act (PURPA). In practice, P.L. 17-77 constrains GPA to

offer no more than 4.54/kWh for power purchased frcm alternative sources,

whether firm power or intermittent, even though GPA envisions bringing new

capacity on-line within i t s planning horizon. No alternative energy source

can complete with the fuel-only cost of producing power frcm GPA's most

eff icient units. Realizing this, the value for internal accounting

purposes of e lect r ic i ty from GovGuam's proposed MSW plant has been set at

8.8/£/kWh, which i s probably a closer representation of the value of

dependable power to GPA.

The mission recommends a more long-term approach to energy

policy/planning, as has been accurately spelled out in the 1983

GPA-commissioned "Framework for an Alternate Energy Plan for Guam" by

Vineta and Associates. GPA management i s aware of the problems inherent i n

P.L. 17-77 and has recommended that the board of directors ask the governor

to seek amendments to the alternative energy law. A consistent framework

for energy development i s required i f Guam i s to diversify i t s energy

sources and reduce petroleum dependence. For example, a major

Japanese-owned hotel employing 2 x 500 kW cogenerating gas turbines i s

presently under construction, although a l l generation w i l l be consumed

on-site. Future such developments may wish to s e l l excess power to GPA;

59

the rates offered must strike a balance between immediate and long-term

economic interests.

6.4 Management Issues

6.4.1 Overview- The power pool agreement with the Navy i s a management

burden frcm which GPA has been trying to escape since 1975. The

termination of the power pool agreement moved a step closer to

actualization through a U.S. Congressional resolution passed in 1984. In

this regard, i t i s interesting to note how perceptions of the equity of the

agreenent have changed over the years. A 1982 GAO study found the power

pool to be a fundamentally equitable arrangement; a Stone and Webster

report released the same year outlined scenarios where the pool worked to

the disbenef i t of GPA. By late 1983, Touche-Ross was recommending system

transfer as soon as possible as i t appeared that the Navy was having a

significant (adverse) cost impact. The mission believes that the pool

agreement should more closely relate charges and reimbursements to the

marginal generation cost of the electr ic systen, with adjustments to

reflect each party's contribution to systenwide generation efficiency. In

addition, the Navy's spinning reserve and reserve margin requirenents

impose unreimbursed costs on GPA that are l i ke ly greater than the increased

generation r e l i a b i l i t y benefit received by the c i v i l i a n population.

6.4.2 Financial management. While rapid increases in fuel costs have

been the trigger of GPA financial ins tabi l i ty , loss of rate-making

authority has exacerbated the disequilibrium. In the past four years the

pcwer to set e lectr ic t a r i f f s has been passed to the Public U t i l i t i e s

Commission, the Legislature, the governor, back to the Legislature, and

las t ly , under pressure from the Department of Interior to meet Federal loan

second refinancing terms, back to the GPA board subject to FUC approval.

60

During this period one rate freeze, two lawsuits, one rate rollback, and

one fai led ballot i n i t i a t i ve for a rollback occurred. Needless to say,

such a regulatory climate does l i t t l e to enhance GPA !s reputation in the

bond market, inspire confidence in i t s ab i l i ty to serve the Navy as a

customer, nor send proper price signals to consumers. The resulting

discontinuous t a r i f f jumps also make demand forecasting that much more

d i f f i cu l t . The present administrative arrangement, that of a regulated

u t i l i t y monopoly overseen by an appointed commission, i s an appropriate

structure and i s recommended for continuation.

6.4.3 Other management issues. N.A.

6.4.4 Recommendations. N.A.

6.5 Elect r ic i ty Pricing

6.5.1 Overview. Elect r ic i ty i s priced at or near i t s cost, as indicated

in Appendix 6.5.1. Tariffs are based on methodologically sound cost of

service assessments and include customer, demand, power factor, fuel (O&M)

and fuel adjustment components. Adjustments between consumer classes are

made based on abi l i ty to pay and equity considerations.

6.5.2 Present t a r i f f s . The present t a r i f f s were put into effect on May

1, 1985 and define eight consumer classes: residential service, general

service—non demand, general service—demand, large power service, private

outdoor l ight ing, small government service—non demand, small government

service—demand, and large government service. The non-demand ta r i f f s ,

including charges for residential service, are computed on the basis of a

single declining block energy charge. The break point for the residential

61

customers i s 100 kWh/rao. The cost of electricity for domestic consumers

more than doubled in five years, as shown in the following statistics:

Residential Customer Average Revenue per

Year kWh (cents)

1978 5.4

1979 5.5

1980 8.1

1981 10.5

1982 11.1

1983 11.1

1984 12.6

Demand tariffs also employ a declining block methodology; however, break

points are determined on the basis of the nunber of monthly kWh consumed

per monthly maximun kW demanded ( i . e . , the ratio of energy consumption to

power demanded). Monthly demand is determined by the maximun average load

during any fifteen minute period as indicated on a demand meter. The

demand-based tariffs have the effect of decreasing the unit cost of energy

to those consumers having a flatter load curve.

6.5.3 Other tariff issues. N.A.

6*5.4 Recommendations- At least once in the past the Guam Legislature

has provided direct subsidy ($4.3 million in 1982), rather than rate

increases, as the means to enable GPA to meet i ts 2.0 times debt service

coverage required by both the Department of Interior and bondholders.

While the mission i s sensitive to the energy cost burden placed on

low-income households which may have motivated subsidization, protection of

62

consumers by the maintenance of an ar t i f ic ia l ceiling price is not

justified economically. To do so provides a false signal to consumers of

the true costs of supply, and may thus steer consumption and investment

decisions along an energy intensive path. An alternative method, which the

mission favors, i s to establish a special class of considers through a

means test. Qualifying "l ifel ine" rate consumers would be allowed, at a

reduced rate, an amount of electricity adequate to meet basic service.

Consumption above this level would be charged at f u l l rate. For a

financially self-supporting u t i l i ty authority, the existence of l i fe l ine

rates of course implies the need for cross-subsidization. Such income

transfers may come frcm upper-income, commercial, or, as the Legislature

has preferred, from government customers.

6.6. RyraJ, Electrification

6.6.1 Overview. N.A.

6.6.2 Recommendations. N.A.

63

7. ENERGY CONSERVATION AND MANAGEMENT

7.1 Opportunities for Energy Savings

As in most parts of the Pacific, there are ample opportunities for

energy savings through increased efficiency in end-use. Hcwever, given

that energy prices have generally been allowed to reflect f u l l costs, Guam

is closer to rational and efficient use of energy than the other

U.S.-adrainistered Micronesian entities. Due to time limitations, the

mission did not have the opportunity to adequately assess through site

vis i ts the extent of conservation. Canments contained in this section are

thus based on general observations and secondary sources, but are offered

as a means of reinforcement for energy managers and policymakers.

Conservation i s one of the priority areas identified by the Guam

Energy Office (GEO) with the support of the U.S. Department of Energy

(DOS). Beginning with the preparation of the State Energy Conservation

Plan in 1977, Guam has participated in a range of DOE conservation planning

and energy extension programs. Total DOE funding for these prograns in

1985 is $431,000, which includes the operations expenses of the GEO. The

Solar Energy and Conservation Bank, established in 1984 under U.S.

Department of Housing and Urban Development funding, additionally provides

finance for energy conservation measures for residential buildings.

Substantial financial resources are thus available to the GEO.

Nevertheless, GEO's success in demand management i s limited by a lack of

baseline energy use data due to inadequate data collection. High solar

insolation levels and typhoon vulnerability are commonly given rationales

for high energy use in space cooling and general energy inefficiency. The

mission, however, does not consider these to be absolute constraints to

improved energy management in Guam.

64

7.1.1 Households. There is considerable scope for continuing consumer

education on the selection and use of energy-efficient appliances as a

follow-up to a 1984 public awareness campaign. The present distribution of

tips of this nature is via the quarterly GEO newsletter and through a

pamphlet entitled "Energy Conservation for Guam Households." A more

effective channel would be through the ut i l i ty b i l l ing system, and

discussions should be initiated with the GPA to enlist their cooperation.

Consumer-oriented information should emphasize relative costs of domestic

tasks—air conditioning, water heating, cooking, food storage,

etc.—performed by various sizes and classes of equipment. Residential

energy audits are another excellent means of increasing energy awareness

and promoting wise use. Approximately 10,000 two-page home energy audit

forms have been distributed since summer 1984 and the response rate has

been over 40 percent. Returned forms are processed by the GEO with the aid

of a microcomputer program that analyzes patterns of energy use and

suggests energy-saving measures. Effectiveness of these audits can be

increased considerably by a follow-up program to determine implementation

rate and effect of the recommendations, especially i f performed on an

in-person basis.

7.1.2 Lighting. Natural lighting can be substituted for a r t i f ic ia l

lighting when feasible, particularly in new structures. When not practical

due to typhoon-resistance requirements, i t should be provided by the most

efficient means possible. Although having somewhat higher i n i t i a l cost,

compared to incandescent bulbs, fluorescent lighting provides three times

the illumination per unit of energy consumed and has the added advantage of

reducing indoor heat loads. Thus 18 W tubes manufactured in the U.S.,

65

Japan, and the Netherlands readily substitute for 60 W globes and can be

fitted to the same bayonet socket.

7.1.3 Refrigeration and cooling. Guam has a mean average climate of

85°F at 75 percent relative hunidity. Outside of transportation, air

conditioning i s the largest civi l ian energy use in Guam, and l ikely has the

greatest waste in application. The most recent information available to

the mission on components of air conditioning demand is frcm the 1977 Guam

Energy Conservation Plan, as follows:

Classification

Projected 1980 Inventory (103 ft 2)

1977 Unit Demand

103 BIU/ft 2/yr)

Projected 1980 Demand (109 BTU/yr)

(AC/Total)

Retail 1,071 34.4 36.8

Schools 788/2,355 31.8 25.1

Residential 14,514/30,056 25.5 370.1

Commercial offices 1,041 21.8 22.7

Government offices 338 36.8 12.4

Hotels 801 30.3 24.3

Hospitals 236 64.6 15.2

506.6

If converted at 7-0 average EER (Energy Efficiency Ratio = BTU/hr cooling

capacity T Watts electric power consumption), air conditioning loads

consuned 72.4 million kWh in 1980, or 15 percent of civil ian electrical

energy demand. Although this may be an underestimate, the figures are

illustrative of the importance of space cooling in the total energy

picture; the residential sector i s of particular significance. Figures

66

from the 1980 Guam Housing Census detail house construction type:

Housing Type No. of Units %

Concrete block 13,810 49

Poured concrete 9,172 33

Other (wood, metal) 5,109 18

28,091 100

Fifty-nine percent of the housing stock was under 10 years old at the time

of the survey. Heat-retaining concrete block construction and f lat

concrete slab roofs are necessary evils in typhoon-prone Guam.

Nevertheless there are numerous techniques, well-known to the GEO, for the

reduction of residential air-conditioning loads, as follows.

o Increase of thermostatic settings to 78°F i s the most obvious

measure.

o Energy-conscious architectural design, as reflected in siting,

orientation, and landscaping, contributes to greater

efficiency in new or renovated homes. GEO distributes an

excellent book written by local AIA architects entitled,

"Energy Conscious Residential Design For A Tropical Isle":

this 117-page illustrated reference i s a model for other

island countries.

o Insulation and application of reflective white exterior

paints, especially on flat roof surfaces, substantially reduce

solar heat gain. Polyurethane exterior coatings are

effective, but high in i t i a l costs and disappointing weathering

resistance have deterred many home-owners. Special window

67

films, glazing, and screens can partially correct for existing

house design weaknesses,

o Natural ventilation can be promoted through appropriately

placed windows and louvers, and assisted by ceiling fans.

When combined with adequate sun control, air conditioning use

can virtually be eliminated.

A GEO sponsored "Energy House" located next to the University of Guam

campus illustrates these techniques.

7.1.4 Transportation. The current vehicle fleet consists mostly of

small, fuel-efficient Japanese sedans, and i t can be expected that new

vehicles w i l l be of a similar type. The short lifetime of vehicles in the

corrosive salt air environment ensures that the turnover of the automobile

stock w i l l be frequent. Thus, improving vehicle maintenance and reducing

the use of vehicles are the main means of saving imported fuel. Drivers

need to be reminded of the benefits of keeping engines well tuned and tires

properly inflated.

7.1.5 Industry and commerce. The GPA provides incentives for power

factor correction through the large power consumer tariff schedule. With

technical assistance from GPA, a nunber of businesses have installed

capacitors in response to the power factor charge.

A Federally funded Institutional Conservation Progran (ICP)

provides money for energy conservation projects in schools, hospitals and

other buildings owned by units of local government. The progran provides

funds mainly for projects with payback periods of two to ten years.

Retrofits have focused on air conditioning and water heating and include

68

insulation, roof painting, sealing off permanently air conditioned areas,

and water heating through chiller waste heat recovery.

Government purchases of energy-consuming equipment f a l l under the

"Energy Efficient Procurement Guidelines" adopted in 1982. The manual

explains energy efficiency and life-cycle costing concepts and provides

simple formulae by which energy costs are to be factored into purchasing

decisions. Bidders are required to furnish kWh, EER, mi/gal, etc. data

with their price quotations.

7.1.6 Building codes. Building codes have been revised to incorporate

ASHRAE Standard 90-75 as applicable to Guam. The governing agency

primarily responsible for building code conformance i s the Plans Review

Division, Building Permits Section of the Department of Public Works. The

extent of compliance and enforcement was not observed by the mission.

Compliance by the building construction industry is primarily on a

voluntary basis.

7.1.7 Energy audits. In addition to the residential audit program

reviewed above, the GEO extends audit activities to schools and hospitals

through ICP-funded architectural/engineering consultant services.

Regarding the commercial sector, since 1983 GPA has offered the service of

their Engineering Department to any business desiring an energy audit of

their establishment. This includes use of an infrared camera which

indicates temperature loss and pinpoints malfunctioning units within

machinery. The degree of participation among the private sector i s not

known to the mission.

7.2 Government Measures

7.2.1 Energy pricing. The main issues here have been discussed under

electricity and petroleum pricing.

69

7.2.2 Legislative controls. Generally speaking, if. the price of energy

adequately reflects i t s cost of production and delivery, there is no

economic reason for penalizing or prohibiting particular uses of energy.

The key exception occurs when consumption decisions do not impact on the

users of energy, as in the government sector where the price mechanism does

not function. A degree of individual accountability i s achieved through

the apportionment of departmental or agency energy budgets to responsible

allottees. For maximun effectiveness, allotments should be based on energy

audit findings and mandated efficiency standards rather than historical

consumption. Additional regulation i s justified i f budgetary incentives

prove inadequate.

7.2.3 Qther mea vrsa. N.A.

70

8. ENERGY ADMINISTRATION AND PLANNING

8.1 Present Arrangements

8.1.1 Overview. Energy planning responsibilities currently l i e with a

number of government bodies. The Guam Energy Office comes under the Office

of the Governor but receives primary funding from the U.S. Department of

Energy. In line with USDOE mandates and grant conditions, the GEO

concentrates on conservation and the renewables. The GEO is headed by a

director appointed by the governor and counts a staff of seven including a

deputy director, accountant, and administrative assistants.

Generation planning and implementation are handled by the Guam

Power Authority, augmented by outside consultants. Capital budgeting for

power system improvements and generation fuels procurement i s similarly the

responsibility of GPA. Electricity tariff setting i s the province of the

GPA Board of Directors, subject to the review and approval of a Public

Ut i l i t ies Commission appointed by the executive branch. The Guam

Environmental Protection Agency (EPA) has taken a lead role in the MSW

plant investigations, while the Office of the Governor has been closely

associated with the windfarming proposal. Lastly, statutory authority for

energy legislation rests with the Legislature.

8.2 Issues and Options

8.2.1 Overview. The strengths of the Guam Energy Office reflect the

intent and structure of the Federal grants which provide virtually 100

percent of program support funding. Activities in conservation and energy

education are well targeted. However, the administrative burden imposed by

complex and bureaucratic Federal contracts and grants procedures ensures

that more traditional energy planning functions receive inadequate

attention. Analyses of energy options and policy recommendations are

71

neither detailed nor comprehensive and suffer from a lack of coordination

with other responsible agencies (e.g., GPA, Planning, EPA, and DPW).

Energy data-base information including his tor ical supply/demand i s spread

amongst various entit ies, including the GEO, GPA, Department of Commerce,

Department of Revenue and Taxation, Office of the Governor, and four o i l

companies (plus, of course, the U.S. mi l i ta ry) . The GEO i s appropriately

designated in P.L. 17-77 as the agency responsible for coordination of the

development of conventional and alternate energy resources. Yet because of

incomplete integration with the Government of Guam (part ia l ly a consequence

of i t s outside source of funding) and a shortage of staff experienced in

planning and technical assessment, the GEO i s presently poorly equipped to

serve in this role. In the resulting vacuum, debate over the relat ive

merits of OTEC, windmills, and energy pricing has been i l l- informed. The

mission believes i t f a i r to say that energy matters have become a po l i t i c a l

battleground for the often opposing interests of the governor and the Guam

Legislature. In sun, although at the forefront in seme areas, overall

energy planning capability in Guam in many respects significantly lags that

in many Pacific nations. A l l of these island neighbors have total energy

demands smaller than Guam's.

8.2.2 The role of the Guam Energy Office, Policy analysis coordination

and monitoring should be the function of the GEO. The GEO would interact

with GPA in the same manner as with a nunber of implementing agencies in

government: commerce, transportation, public works, forestry, and the

l i k e . Policies and prograns devised by the GEO in consultation with other

agencies would be docunented and presented prior to the determination of

annual budgets. Pr ior i t ies would be proposed by the GEO and carried to the

Office of the Governor for support.

72

In the programs and projects approved, the specific

responsibil i t ies of the implementing agencies would be agreed upon and

resources assigned. The GEO would assist with l i a i son , information,

analysis, and monitoring of performance. In order for the GEO to

effectively carry out these responsibil i t ies in conjunction with i t s

Federally funded conservation, education, and demonstration emphasis, local

funding support for the recruitment of technically-trained

planning/analysis personnel i s required.

9. ENERGY OUTLOOK. N.A.

10. REGIONAL ASSISTANCE FOR ENERGY AND DEVELOPMENT. N.A.

73

Annex 1

Appendix 3.1.4 PETROLEUM FUEL CONSUMPTION IN 1984

This appendix refers specifically to the breakdown of fuel use in Table 3.2. Non-military uses are internal consumption only; international transport, re-sale or re-export are excluded.

Mili tary uses

Figures are based on volumes reported by Naval Fuel Depot, Guam. Consumption by military personnel and c i v i l i a n employees of the defense establishment for non-military purposes i s excluded frcm this category. Proportion of gross energy consumed by the Navy (41 percent) under the island-wide power system pool arrangement i s included in th is category.

Household y$eg

A l l kerosene use i s allocated to this purpose, although there may be miner non-fuel ( i . e . , solvent) uses in industry. The proportion of LPS supplied to households i s based on sales figures from the two on-island suppliers.

Transportation

The amount of d i s t i l l a t e used for transportation i s estimated as the residual after subtracting heat raising, construction and Guam Pcwer Authority uses from the to ta l . Motor sp i r i t i n this use category i s the remainder after subtracting a small amount for local fishing and farm machinery consumption.

He^t/9te9m-raJlSl,ng

Fuel consumption i s based on o i l company estimate that one-third of c iv i l i an auto d i s t i l l a t e i s burned in industrial and hotel boilers.

Elec t r ic i ty generation

Residual fuel o i l and auto d i s t i l l a t e use i s as reported by GPA. Fifty-nine percent of gross energy in these fuel volumes was then allocated to c i v i l i a n power generation and the balance to mili tary uses.

Otter This heading includes construction machinery consumption (per o i l

company estimate of 10 percent of c i v i l i a n ADO use), pre-mix consumption by local fisherman (66,000 boat-hours x average 4 gal/hr), non-household LPS use, plus a small anount f o r 260 farm tractors.

74

Annex 2

Appendix 4.2.5

WOOD-FIRED POWER STATION FOR GUAM: COSTS OF PRODUCTION

Parameters

o Plant i s 2 x 2.5 W base-loaded at 80 percent load factor. Capacity factor i s 72 percent.

o Li fe of plant i s 20 years.

o Discount rate =10 percent.

o Wood yields are 25 BDT/ha/yr for exotic leucaena (e.g. K-8) on good quality si tes.

o Cost of fuel as delivered i s $3Q/green ton or approximately $60 BDT (50 percent mcwb at harvest). Cost estimates based on Mayer (1982), adjusted for y ie ld and inf la t ion.

o Wood fuel as f i red i s 40 mcwb =11 MJ/kg ca lo r i f i c value.

o Parasitic plant losses = 10 percent.

o Overall plant efficiency =15 percent.

o Annual production i s thus 31.5 GWh.

o Capital costs are $2,000 per instal led kW, including engineering and ins ta l la t ion. Total investment i s thus $10.0 M.

o Operations and maintenance other than fuel and labor are taken as 2 percent of capital cost excluding engineering (10 percent of capex), or $200,000 p. a.

o Labor (three shift operation).

Plant supervisor (1 only) $ 30,000

Foreman/mechanic (1 per shift) 50,000

Semi-skilled staff (3 per shift) 90,000

Laborers (3 per shift) 65,000

$235,000/yr

75

o Wood fuel

Input wood requirenent (31.5 GWh) (3.6 MJ/kWh)

(11 KJ/kg)(0.15)

68,727 te/yr § 40* mcwb

41,236 BDte/yr

45,463 BDT/yr

at $6Q/BDT

Land requirement i s 1,819 ha.

Costs of production

$2,727,780

$/pa

Capital recovery

$10.0 M § 10J/20 yr

t>M

Maintenance

Labor

Fuel

Wood fuel (§ $6Q/BDT)

1,174,596

200,000

235,000

2,727,780

4,317,376

4/kWh

3.7

0.6

0.7

8.7

13.7

76

Annex 3 Appendix 4.6.2

COMPARISON OF END-USER COOKING COSTS ON GUAM

Electricity

o Tariff i s ~13£/kWh.

o Energy per unit e lec t r ic i ty i s 3«6 MJ/kWh.

o Heat transfer efficiency i s 65 percent,

o Cost i s :

13.0tf/kWh =

3.6 MJ/kWh x 0.65

o Retail price on Guam i s 47£/lb (54/6/lb with domestic delivery) or $1.04/kg.

o Energy content of fuel (propane) i s 50.0 MJ/kg.

o Combustion and heat transfer efficiency i s 55 percent.

o Cost i s :

$1.04/kg = 3.9#MJ

50.0 MJ/kg x 0.55

77

Annex 4 Appendix 4.6,5a

ECONOMICS OF SCLAR DOMESTIC HOT WATER SYSTEMS - GUAM

Parameters

o Elect r ic i ty consumption i s 2,800 kWh/year for resistance type water heaters.

o Electr ic i ty price i s 13^/kWh.

o Solar hot water heating unit i s Solahart 300 LJ passive thermosiphon. Capacity i s 66 gal (300 1) with 65 ft2 collector area. Five year manufacturer's warranty.

o Installed cost i s $2,250. "Solar Bank" subsidy i s 40 percent or $1,000, whichever i s less. Subsidized cost i s thus $1,350.

o Solar benefits additionally include savings on e lect r ic heater resistance elenents, which due to water quality need replacement at reported average 2 year intervals.

Simple payback

Capital investment Simple payback

Annual net operating cost savings

o Annual e lectr ic i ty cost i s :

2,800 kWh x $0.13/kWh $364

1,350 o Simple payback = 3-7 years

364

78

Annex 5 Appendix 4.6.5b

ECONOMICS OF HEAT PUMP DOMESTIC HOT WATER SYSTEMS - GUAM

Parameters

o Elec t r ic i ty consumption i s 2,800 kWh/year for resistance-type water heaters.

o Elect r ic i ty consumption for heat pump i s one-third of resistance heater (COP = 3.0), or 950 kWh/year.

o Heat pump unit i s E-Tech R106 integral type mounted on standard 66 gal, 4.5 kWe water heater tank. Five-year manufacturer's warranty.

o Installed cost i s $1,500. "Solar Bank" subsidy i s 40 percent, or $600. Final cost to homeowner i s thus $900.

o Heat pump benefits additionally include cooling and dehumidification at 8,300 BUJ/hr and 1.5 pints/hr, and savings on e lec t r ic heater resistance elements which due to water quality need replacement to reported average 2-year intervals.

Simple payback

Capital investment Simple payback =

Annual net operating cost savings

o Annual e lec t r ic i ty savings are:

(2,800 kWh - 950 kWh) x $0.13/kWh = $240

$900 o Simple payback = = ^.8 years

$240

79

Annex 6 Appendix 6.2-1

GUAM IWPS GENERATING CAPACITY

Nane Plate Capacity

Generating Unit (MW)

Cabras Stean Plant No.1 66 No.2 66

Tanguisson Steam Plant No.1 26.5 No.2 26.5

Tamuning Diesel Plant No.1 2.5 No.2 2.5 No. 3 2.5* No.4 2.5*

Dededo Diesel Plant No.1 2.5 No.2 2.5 No.3 2.5 No.4 2.5

Cabras Diesel Plant No.1 2.5 No.2 2.5

GPA sub-total 205.0

Naw

P i t i Stean Plant No.1 22 No.2 22 No.3 11.5 No.4 11.5 No.5 11.5*

Dependable L i fe Capacity On-line Expectancy

(MW) Year (Years)

66 1974 30 66 1975 30

25 1971 30 25 1972 30

2 1970 25 2 1970 25

1970 25 1970 25

2 1972 25 2 1972 25 2 1972 25 2 1972 25

194.0

22 1964 30 22 1964 30 11.5 1951 30 11.5 1951 30 — 1955 30

80

Agana Diesel Plant 10 x 600 KW

Orote Diesel Plant 10 x 600 kW

Navy sub-total

6

79.0

5

77.0

1950

1950

25**

25**

IWPS TOTAL 284.0 271.0

*Damaged/not in service **Per General Accounting Office recommendation

81

Annex 7

Appendix 6.3.2

GUAM IWPS RESERVE MARGIN

Parameters

o Peak load forecast growth is 1.8 percent p. a.

o Dependable capacity includes al l in-service generation units and is based on name plate capacities de-rated to reflect current operating condition.

o Reserve capacity reflects dependable capacity adjusted by one scheduled and one forced outage; i .e. , largest units out at each of two stations.

Firm Capacity

Dependable capacity Less : Largest units out

Firm capacity

271.0 W Less : 91.0 Mtf (1 x 66 MW Cabras + 1 x 25 W Tanguisson)

180.0 m

Reserve Margin—No Retirement

Forecast Firm Reserve Year Peak Load (MW) Capacity (MW) Margin (MW)

1985 149.3 180.0 30.7

1990 163.3 180.0 16.7

1995 178.5 180.0 1.5

2000 195.2 180.0 (15.2)

82

Reserve Margin—With Scheduled Retirement

Forecast Units Finn Reserve Year Peak Load (MW) Retired Capacity (MW) Margin (MW)

1985 149-3 Agana & Orote Diesel 170.0 20.7

1990 163.3 Piti 3 & 4. 147.0 (16.3)

1995 178.5 Tamuning Diesel 143.0 (35.5)

2000 195.2 Piti 1 &2 91.0 (104.2) Dededo Diesel

83

Annex 8

Appendix 6.5.1

GUAM GPA COST OF ELECTRICAL SERVICE—1984

PRODUCTION (BUSBAR) COST ANALYSIS (excluding military)

o 1984 gross generation was 1,002,310,000 kWh. Allowing 41 percent to Navy, GPA share was 591,363,000 kWh.

o Generation plant investment through 1984 is $52.9 M, valued at cost. Total GPA installed capacity is 205 W ($258/kW). Estimated replacement value is $164 M ($800/kW).

Production expenses for 1984:

Fuel

Other 0*M

Less: Costs recovered from power pool

Costs of production

o Capital

$164 M § 101/30 yr

o Fuel + Other 0*-M

55,985,572

5,247,077

61,232,649

(23,213,880)

$38,018,769

$/p.a.

17,396,997

38,018,769

53,241,141

*/kWh

2.9

6.4

9.3

FULL COST ANALYSIS (excluding military)

o GPA net system deliveries were 532,969,000 kWh (10 percent losses).

o Total GPA utility plant investment through 1984 is $67,345,865 per pcwer pool agreement, valued at cost. Estimated replacement value is $200 M.

84

Costs of production

o Capital recovery

$200.0 M § 1056/30yr

o Fuel

o Other production 0+-M

o T+D

o Accounting

o G+A

Less: Costs recovered from power pool

$/p.a. *6/kWh

21,215,849 4.0

55,985,572 10.5

5,247,077 1.0

4,733,008 0.9

1,052,437 0.2

3,555,362 0.7

(23,213,880) (4.4)

12.9

85

Specie References

Brewbaker, J.L. and MScDiqkgn,'eds;/; 11982.' Bicmass Energy Options for the American Territories o£ the Pacific. University of Hawaii, November. 73PP- /r»^- ?^r ' ^- '

Khamoui, Thao. 1981. Woodchip E^brt *H>t4 tiai for Guam. Quarterly Economic Review, Vol.4, No.2. Agana, Guam.

Mayer, Peter. 1983. Preliminary Financial Analysis of Guam*s Electricity Generating Options. MARC Working Paper #39. Micronesian Area Research Center, University of Guam. 56 pp.

THE EAST-WEST CENTER is a public, nonprofit educational institution with an interna­tional board of governors. Some 2,000 research fellows, graduate students, and profes­sionals in business and government each year work with the Center's international staff in cooperative study, training, and research. They examine major issues related to population, resources and development, the environment, culture, and communi­cation in Asia, the Pacific, and the United States. The Center was established in 1960 by the United States Congress, which provides principal funding. Support also comes from more than 20 Asian and Pacific governments, as well as private agencies and cor­porations.

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