Guam Power Authority's Long Road Towards Reliable Power: A Presentation to the Pacific Power Association

1. Guam Power Authority Presentation to the Pacific Power Association 14 th Annual Conference & Trade Exhibition August 26, 2005 From Independent Power Producers to Performance Management Contracts, Guam Power Authoritys Long Road Towards Reliable Power

2. 2 Team Members Frank S. Blaz GPA Manager of Generation John J. Cruz, Jr., P.E. GPA Manager, Strategic Planning & Operations Research Jennifer G. Sablan GPA Asst. Manager, Generation (Acting) Arlene M. Aromin, P.E. Special Projects Engineer, GPA Executive Office

3. 3 Overview Introduction History Performance Management- Concept Performance Management- Reality Performance Management- The Experience Conclusion

4. 4 Introduction Pioneered Public-Private Partnerships on Guam Independent Power Producers Performance Management Contractors

5. 5 History Challenges to address the ongoing emergency and urgent need for adequate and reliable power generation system in Guam Depletion of Personnel Resources Accelerated Load Growth beyond forecasts Increased Forced Outage Rate Load Shedding GENERATION EXPANSION PROJECTS 1993 Fast Track Diesel (App 93 Mw) 1992 / 1994 Dededo Combustion Turbine (App 45 Mw) 1995 / 1996 Cabras 3 & 4 (App 79 Mw)

6. 6 History- Privatization Phase I 1996 - GPA began emergency procurement for Independent Power Producers (IPP) & Performance Management Contractors (PMC) Marianas Energy Company (MEC) Piti 8&9 - 88 MW Slow Speed Diesel (1999) Taiwan Electrical and Mechanical Engineering Services (TEMES) Piti #7 - 40 MW Combustion Turbine (1997) Pruvient Energy Guam Inc. Tanguisson Power Plant - 53 MW Steam (1997)

7. 7 History Load Shedding Blues

8. 8 History- Privatization Phase I IPP Responsibilities: Construction, operation and maintenance Performance Guarantees (Heat Rate & Availability) PMC Responsibilities: Rehabilitation, operation and maintenance Management of GPA Employees Performance Guarantees (Heat Rate, Availability, EFOR)

9. 9 PMC Conceptualization Continued Improvement of GPA Operations Lockbox Accounts Further Privatization Efforts (PMC) Public Utilities Commission strongly recommended the implementation of permanent PMC Cabras Steam Power Plant Cabras Low Speed Diesels Development of RFP for privatization of management of all GPA Baseload Plants.

10. 10 PMC - Reality Financing Budgeting Compensation Structure Staffing Training Operations Maintenance Performance Improvement Projects Outsourcing Contract Terms Communication and Reporting

11. 11 PMC- Reality Performance Management Contractors 2003 - Taiwan Electrical and Mechanical Engineering Services (TEMES) Cabras 1&2 132MW Steam 2005 - Doosan Engine Cabras 3&4 88MW Slow Speed Diesel

12. 12 PMC The Experience Equivalent Availability Relative Heat Rate Staff Optimization Operations & Maintenance Spending Personnel Overtime Spending

13. 13 Contract Fees

14. 14 Net Generation

15. 15 Plant Efficiency

16. 16 IPP / PMC The Experience Eye Candy

17. 17 Cabras Power Plants Historical Vs. Post PMC Performance

18. 18 Cabras Power Plants Historical Vs. Post PMC Performance PMC

19. 19 MEC Power Plant Performance

20. 20 MEC 8&9 Availability

21. 21 Tanguisson Power Plant Performance

22. 22 Cabras Power Plants Historical Vs. Post PMC Performance Post PMC

23. 23 Cabras Power Plants Historical Vs. Post PMC Performance Post PMC

24. 24 Cabras Power Plants Historical Vs. Post PMC Performance

25. 25 Cabras Power Plants Historical Vs. Post PMC Performance

26. 26 PMC - Conclusions Significant Plant Performance Improvements Staffing Optimization Expedited completion of CIP/PIP (Procurement) Heat Rate, efficiency gains Reliability improvements Skills improvement of O&M Personnel Process efficiency enhancements Economic Dispatching Results: $ Savings to GPA and its ratepayers

27. 27 Thank You! Questions or Comments?