The Guam Power Authority is looking to negotiate a reduction in insurance with the utility’s carrier Lloyds of London.

While the authority is unsure how much or whether Lloyds will reduce GPA’s premium insurance costs Joaquin C. Flores acting general manager at GPA told the Journal the benefit for Guam is considerable. “Any savings will allow for more capital improvement projects and if it’s ongoing or year after year we (GPA) can do a lot of projects or the savings can go into the authority’s self-insurance.”

GPA’s insurance premium is costing the utility agency $6.2 million with Lloyds for property coverage from November 2004 to November 2005.

Flores said GPA’s property insurance with Lloyds primarily covers GPA’s power plants and some types of utility equipment.

Independent consultant engineers from Grennan & Associates of Omaha Neb. conduct a risk assessment every year of the utility and the insurance company tracks how well GPA remedies the high-risk potential problems indicated by Grennan & Associates. Flores said he also has been tracking the insurance engineers risk assessments and GPA’s ability to mitigate.

Flores — or a Grennan & Associates consultant or both — is tentatively scheduled to visit London in September to negotiate the reduction in GPA’s insurance GPA’s first lowering of premium.

Lloyds does not cover damage that affects Transmission and Distribution or T&D such as utility poles electrical wiring substations etc. The Public Utilities Commission allows GPA to fund a special reserve for emergencies or any non-covered Federal Emergency Management Agency or FEMA insurance.

Flores said “GPA hasn’t had T&D insurance for so long even before Supertyphoon Paka in December 1997; we don’t even get quotes anymore because it’s way too costly.”

GPA self-insurance averages about $2 million annually. Typhoon Chata’an devastated Guam in July 2002 and GPA received FEMA assistance up to $4 million for restoration. Five months later GPA claimed a damage estimate of more than $20 million in the aftermath of Supertyphoon Pongsona.

The disasters each took six to nine weeks for substantial recovery affecting many businesses. Both typhoons required significant cash outlays to expedite recovery. Most of these costs were deemed eligible for reimbursement from FEMA with costs from both storms qualifying for a 90% reimbursement.

David B. Cohen deputy assistant secretary for Insular Affairs of the U.S. Department of the Interior said in an April 2003 announcement “After watching FEMA have to replace power line poles in July and then have to replace those same poles again five months later it makes sense to explore infrastructure hardening investments that can help people during the next storm and save the federal government money.”

In fact GPA has started the work of placing existing overhead electric distribution infrastructure underground. On June 21 GPA held a groundbreaking ceremony at the Archbishop Flores Memorial Circle in Tamuning to initiate the underground line construction of the first two of nine mitigation projects totaling $20 million. The funding is being provided by the Federal Emergency Management Agency’s Hazard Mitigation Grant and GPA’s revenue funds and the work will be performed by ???

Art S. Perez communication manager at GPA said the government utility is required to match 10% of the federal funding which is approximately $2 million. Capital improvement projects require the construction contractor to remove the existing overhead power systems and the installation of the new underground power systems.

The P-401 underground project proposes to place electric wires underground from the San Vitores GPA Substation in Tumon to the Guam Memorial Hospital Authority in Tamuning. TG Engineers was tasked to design the P-401 project and M.D. Crisostomo Inc. was awarded the construction bid on May 16. The P-003 project will start from the Piti Substation toward the Cabras Island Dispatch Center and was designed by EMCE Design Engineers and was also awarded to M.D. Crisostomo Inc.

Flores said “Restoration to GMH has always been a priority during typhoon recovery. By the end of November those restoration assets can be reassigned to other damaged circuits to hasten recovery efforts; and the line to Cabras Island would reduce recovery time to GPA’s Dispatch Center.”

The nine planned underground projects that are to be completed by 2007 are focused in the widely populated business districts.

Flores said “After a typhoon we present restoration projects to FEMA and they look at the Benefit Cost Analysis and FEMA grants funding for areas that would have the greatest economic cost.”

GPA is planning an island-wide underground system which can take up to 10-15 years to complete. Spreading the projects over time will keep the rates charged to customers commercial and residential from rising drastically.

The FEMA deadline to finish all nine projects is 2007. The remaining underground projects include Tamuning to Tumon (Tamuning GPA substation near Tamuning Post Office out to Marine Corps Drive going northbound to Tumon GPA substation near Kmart); Harmon to Tumon (the Harmon GPA substation across from Micronesia Mall down Route16 to McDonald’s up to Marine Corps Drive then southbound to the Tumon GPA substation near Kmart); Macheche to San Vitores GPA substation; Macheche to GAA; Harmon to Tanguisson; Agana to Tamuning; and the Tamuning Feeder underground conversion.

Flores said “All existing GPA customers along the proposed underground line routing will be converted to the new system. In addition to the aesthetic benefits the project will achieve the new underground line will be upgraded to accommodate future developments on the old GMH site.” MBJ