Guam - The Guam Power Authority and the Public Utilities Commission are in discussions about the process of transitioning into true cost of service.  This means residents could see another spike in their power bills while the government and private businesses could see their bills reduced.

Of its 40,000 customers, nearly 95% of the Guam Power Authority's customer base is residential. The rest of the customers are the government class, the Navy and the commercial class. Consolidated Commission on Utilities chair Simon Sanchez said, "Even though it's cheaper, the cost to serve the government and the business community the rates that have been charged the government and the business community have been higher than it really costs to service them and they've been made higher so that we can keep residential customer rates lower," he said.

Sanchez says GPA and the PUC have been discussing how to correct the subsidy and inequity that has been occurring. It's been difficult though as GPA continues to raise its rates.  Even now the utility is seeking a 7.5% base rate increase over the next five years.

The PUC is now left to decide how to transition to true cost of service to get rid of the subsidy that the business and government communities have shouldered for more than two decades.

"GPA is proposing to transition over a 7-8 year period to really. Because we know it's really going to impact the residential community the most. So let's take our time in doing it.  The PUC, we'll wait to see what they decide," he said.

Sanchez says the Public Utilities Commission will have the final say and can accept, adjust or reduce the proposal from GPA. "It's not imminent that you're going to see a major impact on your power bill, up or down, what's more imminent is the rate case that is currently under review. But over the next, depending on what the PUC decides, over the next decade during these next few years, there's going to be a consideration about moving to pure cost of service-based rates," he said.

Sanchez says there have been arguments supporting the subsidy saying the business community brings in one million visitors a year and they can afford to pay the additional cost. Ultimately, he says it's a policy call, noting, "Should we begin to correct the inequity between the government class, the commercial class and the residential class and if we do, what you'll see is government and commercial bills go down and residential bills go up."