Guam Ukudu Power owes $7.44 million in liquidated damages for commissioning delay
BY SKYLER OBISPO
Journal Staff
The liquidated damages tied to the commissioning delay of the Ukudu Combined Cycle Combustion Turbine Power Plant currently total $7.44 million.
This figure is cited in a Nov. 14 letter between Guam Power Authority General Manager John M. Benavente and CEO of Guam Ukudu Power LLC Jaesuk Han.
The amount reflects liquidated damages for October following GUP’s failure to meet the Sept. 30 commissioning deadline.
The Guam Ukudu Combined Cycle Combustion Turbine Power is expected to continue commissioning related activities up until the end of this year. Photo by Skyler Obispo
Under Article 8.6 of the Energy Conversion Agreement, GUP is required to pay $240,000 each day of the delay.
At a Nov. 18 media briefing, GPA Assistant Chief Financial Officer Maripaz N. Perez said the utility plans to apply the liquidated damages to the Levelized Energy Adjustment Clause once received.
The LEAC rate determines how much a customer pays to help cover the cost of fuel purchased by GPA. LEAC is reviewed semiannually and is determined on oil market conditions.
“Essentially, the reason why we have inefficiencies and higher LEAC rate is because we had to run the less efficient generators, Cabras 1 and 2,” she said. “Had Ukudu been online, we wouldn't have had to spend that much fuel, and run the inefficient unit.”
Perez said the utility had to purchase an additional $20 million in fuel for the Cabras plant because of the delay.
Once fully commissioned, the Ukudu plant could save more than 900,000 barrels of oil annually, Perez said. At roughly $100 per barrel, that equates to about $90 million in annual savings.
Residential customers could see monthly power bills of $253 to $261 by February 2026, on top of planned LEAC adjustments and a proposed base rate increase.
However, the final liquidated damages amount is still under negotiation and could exceed the current $7.44 million estimate.
The Ukudu plant is expected to be fully commissioned no later than Dec. 31. mbj
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