HAGÅTÑA (The Guam Daily Post) — The Guam Waterworks Authority is proposing significant rate increases as part of its fourth consecutive five-year financial plan and capital improvement program, for fiscal years 2025 through 2029.
The largest individual rate hike is proposed for the first year, at 29% for the non-lifeline rate. The proposed non-lifeline rate increase for fiscal 2026 is 12.5%, but there is also a proposed 12.5% rate hike for the lifeline rate in this fiscal year. The proposed non-lifeline rate increase for the remaining years, up to 2029, is 10% for each year.
GWA is seeking approval from its governing body, the Consolidated Commission on Utilities, to begin engaging the rate-setting Public Utilities Commission on its plan.
According to a draft CCU resolution, the proposed rate increases are meant to support about $780 million in new debt financing, internally fund $115 million in capital improvement projects, maintain cash reserves required under bond indenture, replenish GWA’s Rate Stabilization fund, gradually increase debt service and support water loss reduction efforts.
“Along with those rate increases, we are proposing to adjust the legislative surcharge, which is used to pay for the retirees, the benefits that we pay on their behalf,” GWA Chief Financial Officer Taling Taitano told CCU members during a work session on Tuesday.
“It’s currently at 3.8%, and we’re proposing to change it to 3.5% in FY 2025, 3.2% in FY 2026 and 3% in FY 2027 through FY 2029. You might be aware that the legislative surcharge is applied against non-lifeline rates and our base charges,” Taitano added.
During the work session, Taitano also mentioned that she believed the water utility’s general manger previously indicated there would likely be large rate requests due to the partial consent decree signed with the U.S. Environmental Protection Agency and the U.S. Department of Justice regarding sewer system improvement projects and other compliance with the federal Clean Water Act.
Along with the financial plan, GWA will be submitting its five-year capital improvement plan, which totals $898 million over the five years, according to Taitano.
“How we plan to pay that includes $89 million from U.S. EPA grants, $3.75 million from systems development charges, $115 million from revenues, and those revenues are generated as part of the debt service coverage. … We plan to use $780 million of revenue bonds to help fund the CIP, and that includes in FY 2025, $250 million; in FY 2027, $310 million; and in FY 2029, $220 million,” Taitano said Tuesday.
Capital improvement projects involving wastewater collection and wastewater treatment, totaling about $268 million and $62 million, respectively, relate to GWA’s partial consent decree with federal authorities, according to Taitano.
She also said GWA’s plan includes capital improvement projects that address emerging contaminants, such as per- and polyfluoroalkyl substances, known as PFAS.
Post files state that GWA identified 34 water wells that may need treatment if proposed federal regulations on PFAS come into effect. U.S. EPA submitted a proposed final rule on PFAS maximum contaminant levels to the U.S. Office of Management and Budget for review at the end of 2023.
“The big groups to me are the partial consent decree, your PFAS number and your normal waterline replacement that we have to go through. One of (the) things that I remember is we’ve come to the point where we realize that to control the water loss, we have to replace pipes. We have to replace all the pipes on the island,” CCU Chair Joey Duenas said Tuesday.
Taitano said one thing not included now in the plan is the possibility of getting a Water Infrastructure Finance and Innovation Act, or WIFIA, loan, which she said should save some costs, as well as the creation of a tax-exempt commercial paper program.
“It’s in the draft legislation, and we’ve been working with our legislative chair on trying to get that introduced,” Taitano said.
However, regardless of the WIFIA loan or tax-exempt commercial paper program, Taitano said GWA still would need to get legislative authorization for bond funding. She said she believed the plan is to get authorization for the first two tranches of revenue bonds, then return to the Legislature for the fiscal 2029 bond.
Commissioner Francis Santos said Tuesday that Commissioner Simon Sanchez would want to ask for approval of all bond funding in one go. Taitano said she would prefer that method as well. She added that GWA would look at bond refunding possibilities as that becomes viable.
Potential proceeds from a class-action lawsuit regarding PFAS are not included in GWA’s five-year financial plan, GWA said, because that figure is unknown at this point.
“There has been a final fairness hearing in the District Court of South Carolina, where this litigation is ongoing. Right now, what’s happening is … we and all the other claimants in the national water provider settlement against the DuPont (manufacturer) defendant have until May 8 to submit a claim. So there are numerous caveats which will determine our total settlement amount,” GWA legal counsel Theresa Rojas stated Tuesday.
The proposed CCU resolution for the five-year plan states that an advance draft of the plan will be submitted to the PUC on March 4, should the CCU authorize it, after public noticing requirements under the Ratepayer Bill of Rights are met. The final plan and rate petition will be submitted to the PUC on or before June 3, the resolution stated.
Guam Waterworks Authority personnel make repairs to a pipe on July 2, 2023, along Route 16 in Barrigada Heights.
