CUC asks for $1.3M more, 90-day extension for Aggreko

Citing a need for more time to overhaul two power engines, the Commonwealth Utilities Corp. has asked the CUC board to approve a 90-day extension to the original 90-day contract for Aggreko to provide temporary power while CUC’s generator engines are being overhauled and repaired.

CUC executive director Gary P. Camacho disclosed in an interview yesterday that the additional 90 days may cost CUC an estimated $1.3 million more to pay Aggreko. This is on top of the original $1.5 million that has already been approved for the project.

Camacho said the board will discuss the 90-day extension further at a meeting tomorrow, Thursday.

With the possible additional $1.3 million for the extension, CUC now needs over $6 million for the emergency repair and overhaul of power engines at Power Plant 1 in Lower Base and to repay for the Aggreko temporary electric power supply.

Last November, the board approved the release of $6 million from CUC’s $12 million restricted account that was reserved to buy a power engine to replace power engine number 8 at CUC’s Power Plant in Lower Base.

The $6 million was intended for the $1.5 million 90-day contract with Aggreko; $300,000 repair of engine number 6; $2 million for overhaul of power engine number 5; and $2 million for major overhaul of power engine number 7.

CUC’s original plan was to replenish that $6 million taken from the restricted account once the Federal Emergency Management Agency reimburses CUC, and that any funds used from that account will be returned.

Camacho brought up the importance of having the 90-day extension for Aggreko during the board meeting last Thursday, during which Camacho said that CUC’s Power Generation Division has been meticulous in maintaining the power engines but that it is increasingly very difficult with 40-year-old power engines that have 26,000 to 28,000 hours of running time.

He said it was this reason why they got the Aggreko in.

Camacho said they had to start from the scratch by finding a location for Aggreko and clear the location. “We have done that,” he said, adding that the Aggreko engines were supposed to arrive last Wednesday, Jan. 15, but encountered a shipping problem coming out of Asia.

Yesterday, he said Aggreko engines arrived over the weekend and will start producing power by Jan. 25. Under the contract, Aggreko was supposed to start producing power last Jan. 15.

At last Thursday’s meeting, Camacho told the board that they have a bit of problem though because originally Aggreko were supposed to have day fuel tanks. He said those fuel tanks must be filled daily.

Camacho said Mobil made it clear that they may not be able to fill those fuel tanks every day, particularly during inclement weather, due to the type of the products they use, or if there is a problem with Mobil’s vehicles or if there are days that they have equipment failure.

Camacho said the problem with that is, if CUC does not receive fuel every day, they will not be able to turn on the Power Plant. “So if we don’t turn on the Power Plant, it’s going to cause severe issues on our grid,” he said.

Camacho said as what CUC did with Aggreko in 2008, CUC was required to find a fuel pipeline to connect to Aggreko’s fuel tank.

Camacho said now what Mobil plans on what they proposed is that they would be able to deliver fuel through the pipeline specifically for Aggreko, and then it would be fueled from that pipeline to Aggreko.

Camacho said Mobil says in that way, regardless of a typhoon or any type of weather, they will always be delivering fuel.

“That’s something that we are doing,” said Camacho, adding that although it wasn’t part of their responsibility, Aggreko is willing to pay half of the installation of a pipeline.

In addition to the fuel pipeline issue, Camacho said the original request that they had put in for Aggreko was 90 days because that was the assumption from the power plant that the overhaul of the power engines would be done in 90 days.

Camacho said since they received the quotations from a vendor for engines number 5 and 7, the problem is there are about 75 days of work for each.

He said this is the reason why he has to request for an extension of 90 days.

“With an extension, it lowers the kilowatt hour rate from Aggreko,” said Camacho, citing that Guam went from a one year to five-year contract with Aggreko.

“Although it’s not exactly our cost, at least we are selling the kilowatt-hour being produced. So there some sort of recovery,” he said.

Camacho said they have the quotations provided by one vendor or sole bidder to overhaul power engines 5 and 7.

He said the manufacturer of those engines doesn’t even want to bid because the parts for those engines are obsolete.

Camacho said it will therefore require an additional 90 days for Aggreko.

He said when the Aggreko contract was approved, engine number 6, an 11-megawatt power engine, was not operational.

He said a Man BMW expert, an engineer, came to work with CUC staff in the power generation, and they were able to get that engine operational.

“And that engine is back online. So we do have that reserve capacity right now. Very limited but we have some reserve right now without Aggreko,” he said.

“Engine number 5 is down, and 7 is operational. But when 5 comes back up, number 7 goes down and that’s why the additional 90 days,” Camacho added.

Camacho said when they are done with these overhauls in April, they should have the best overhaul they have at Power Plant for years.

CUC board vice chair Weston Deleon Guerrero asked how far are they after the release of $6 million and if they are expecting to exceed that amount and come back to the board again for additional funding.

Camacho said they’re beyond half of the $6 million and that they are indeed expecting to exceed the $6 million.