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The Guam Power Authority is getting $50 million in initial insurance payout from the Cabras 3 and 4 explosion and subsequent fire, and plans to spend about $10 million of that money to clean up debris at the Cabras 3 and 4 power generating units and allow further insurance investigation.
GPA spokesman Art Perez on Monday confirmed the amount of the initial insurance payout.
Of the $10 million, GPA wants to spend $5,996,435 to remove the engine and dismantle the Cabras 4 power-generating unit, which GPA has given up as “a total loss.”
The rate-setting Public Utilities Commission still has to review the clean-up and engine removal plans, but GPA’s board, the Consolidated Commission on Utilities, approved them on Nov. 22.
GPA has submitted a report to its insurers, stating that Cabras Unit 4 is a total loss, and insurers agree that Cabras 4’s engine is beyond economical repair, according to the CCU’s resolution, approving GPA’s plan.
While the clean-up cost wouldn’t be paid for by ratepayers, they face possible rate increases a few years from now because GPA wants to build a new power plant to fill the power-generating void that resulted from the loss of Cabras 4 and the uncertainty of when Cabras 3, which was damaged during the same event on Aug. 31, 2015, might be repaired.
GPA management has previously estimated the loss of Cabras 4 and the damage to Cabras 3 at upward of $100 million.
It remains unclear how much of the total loss of Cabras 4 and the damage to Cabras 3 will ultimately be covered by insurance payments.
Insurers have asked GPA to dismantle Cabras 4’s generator “to allow their consultant to examine and evaluate the extent of damage on the generator,” according to the CCU resolution.
In addition to the proposed engine removal, dismantling and related cost for Cabras 4, GPA also is asking PUC approval to spend $4.8 million for cleaning of “soot and smoke contamination,” demolition and other clean-up work at Cabras 3 and 4, with the goal of preserving Cabras 3 for future repairs.