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ASPA rates to drop significantly when two energy projects completed

ASPA operations building
One of the projects is for wind generation, according to ASPA acting CEO

Pago Pago, AMERIAN SAMOA — When the American Samoa Power Authority’s two alternative energy projects — with an estimate cost of about $142 million — are complete, utility rates will “drop significantly” to 11-cents per kilowatt hour, said ASPA acting executive director, Wallen Young at last Friday’s cabinet meeting.

Reporting on the latest development at ASPA, Young told cabinet members that he was “pleased to report” that ASPA has signed the power-purchase-agreement (PPA), or contract, for 20-megawatts of PV for Tutuila.

At the same time, he added, ASPA is in the process of awarding another PPA or contract, for 42-megawatts of wind generation, and these are two “significantly large” projects — the PV project is estimated to cost $47 million while wind generation is about $100 million.

For comparison, he said the new Satala Power Plant, replacing the old one destroyed by the 2009 tsunami, cost $52 million.

Young explained the “financial model” used by ASPA for the two projects. Under the PPA, “the developer and the investor — they finance, they design, and they build the plant. And they also sell the production to ASPA.”

“Just to give you some idea. ASPA’s cost for electric generation today is about 27-cents per kilowatt hour. Of that 27-cents, 24-cents is fuel and 3-cents is for operation and maintenance,” he explained.

When the two projects are completed, “ASPA’s purchasing cost of power from these investors will be around 11-cents a kilowatt hour. So you compare 11-cents to 27-cents. Electricity prices when compared to today, will be about 30 to 40 percent lower, and it will go on for 25 years. So it's going to be a significant drop in utility rates.”

“The big plus for this is — currently ASPA spends about $27 million to $30 million on diesel every year, but this money goes directly to the fuel company, which then ships the money off island. The money doesn’t stay here,” he pointed out.

But when these two projects are completed, “more than 50% of the money will stay in the local economy. And for every dollar spent, there’s a multiplying effect of about three,” he explained, adding that “some economists believe the multiplying effect is five-times.”

“But customers will have additional money in their pockets to spend and improve the local economy,” said Young, who gave a brief summary of other ongoing projects such as the Tafuna Power Plant; the Ottoville project, which will secure the supply for the Fagaima water wells during hurricanes; a $10 million sewer project called Package 5, which is in progress as well; and about a dozen other projects of different sizes.

In response to the news of future drops in utility rates, Gov. Lolo Matalasi Moliga recalled that when the Administration took the helm of government in January 2013, the price per kilowatt hour was “somewhere over 40-cents, and we have come a long way.”

He also recalled sitting down at the time with the late Utu Abe Malae, before Utu took over the executive director role at ASPA, to discuss bringing down the rates. “He promised to bring the rate down to at least 15-cents before the end of our administration,” said Lolo, who asked Young to continue moving forward with bringing the rates down.

“This is the life of our people. If we bring it down, everybody will benefit,” said Lolo, who explained that this is the reason why the Administration is giving ASPA access to every piece of government land for solar panel projects.

“ASPA is given priority to use up any [ASG] land to make sure that we give our people the benefit of electricity and water,” Lolo said.

While the cabinet meeting was ongoing at the Agriculture Department conference room in Tafuna, just down the street at the Industrial Park — across from ANZ Bank — there was a get-together honoring ASPA’s Transmission & Distribution Team during their week-long program. The gathering included family members for the T&D Team.