5 Year Tariff Petition - Constant...

THO MPSON THOM PSO N & ALCANTARA, P.C.

5 Year Tariff Petition

Submitted to: Guam Public Utilities Commission P.O. Box 862 Hagatna, Guam 96932

Submitted by: Port Authority of Guam 1026 Cabras Highway Suite 201 Piti, Guam 96925

November 2016

Table of Contents

Port Authority of Guam Petition & Board Resolution No. 2016-05 .................. TAB 1

Testimony of Joanne M.S. Brown ... '" ..... , ....................................................... ...... Tab 2 Affidavit Introduction Purpose Background Recommendations Conclusion

Testimony of Felix R. Pangelinan ... .............................. '" .............................. ...... Tab 3 Affidavit Introduction Purpose Background Recommendations Conclusion

Testimony of Felixberto A.Duenas ....................................................................... Tab 4 Affidavit Introduction Purpose Background Recommendations Conclusion

Testimony o.fSimeon S. Delos Santos ... ............................................................. ...... Tab 5 Affidavit Introduction Background Opinion

Appendixes ............................................... '" .................................................... Tab 6

Appendix A-

Appendix BAppendix CAppendix D-

Appendix EAppendix F-

5-Year Accelerated Tariff Petition Analysis (2017-2021) Proposed Timeline Tariff Rate Table Master Plan Update 2013- CD Board of Directors Minutes, September 7, 2016 PAG Memorandum dated November 8,2016 Re: Tariff; Free Time Period - Export September 7,2016 General Notice Advertisement of Tariff Rate Table

BEFORE THE GUAM PUBLIC UTILITIES COMMISSION

IN RE: The Port Authority of Guam's ) PORT DOCKET __________ __ [PAG] Request for PUC ) Investigation of Rates and ) Tariffs )

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PETITION FOR THE APPROVAL OF 5 YEAR RATE INCREASE FOR THE PORT AUTHORITY OF GUAM

The Port Authority of Guam [P AG, Port], hereby request the Guam Public Utilities Commission's [PUC] review and approval of the rate petition.

The Port serves the needs of not only Guam but also the entire Micronesian Region for which it is a transshipment hub. Over 90% of the day-to-day goods and supplies consumed by the population in the region pass through the Port. In order for the Port to remain as a viable modernized seaport, the Port must properly plan ahead to anticipate the changes that will effectuate the Port in the foreseeable future. The proposed 5 year tariff adjustment rate of 7% for year 1 and 2, and a 1 % increase for the years 3 through 5 was determined by revenue requirements of the Port considering projected operating and capital costs and debt service required.

The propose 5 years of tariff increase is vital for the generation of sufficient revenues to cover operating costs of the Port Authority, debt services and capital programs for modernization and sustainability. The primary objective is to maintain an economically sustainable tariff that is equitable and reasonable for the port as well as its users, consistent with the quality and level of service provided by the port. As importantly, the petition will provide the basis and justification for PAG's application to PUC for a change in tariffs.

Testimonies were prepared by management to support this submission. Additionally, outreach presentation was carried out by the Port on November 14th and 15th for the Port User's Group. It covered the changes in the tariff rates as well as a session to address any comments and questions by the main shipping line agents.

This tariff rate increase is part of a long term plan that will allow the Port to keep pace with inflation and fund all necessary Port Modernization Program (PMP) investments, future crane replacements and all other sustainability investments needed to operate selfsufficiently as an efficient and solvent business through the 20-year planning horizon.

P AG hereby petitions the PUC, pursuant to Public Law 30-52, for general tariff increases of 7% for year 1 and 2, and a 1 % for years 3 through 5 as recommended in our 5-Year Accelerated Tariff Petition.

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The timing of the PUC's action is crucial, and we request action by the PUC in an expeditious manner as much as possible. We look forward to working with you and the PUC's consultants.

Dated this 15th day of November 2016.

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(/.....,/k.~ ~'t:f.,tiC4-:I- ,!,

.(/ .t9afme M.S. Bro~n '" P A G General Manager

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BOAIW OF DIRECTOnS FmlldH'() C. Salll().'·. Chairmall O.\'('a rl\. Cail 'o. Vice Chairmall Tilll()lh." 'I : KCl'llaghall. !Joard Sccrel{/lY Mcfallic N. Melldi()/a. Mem/Jcr

Resolution No. 2016-05

RELATIVE TO FILING THE MODIFIED ACCELEnATED TAnIFF PETITION TO THE PUBLIC UTILITIES COMMISSION TO SUPPonT CRITICAL PORT MODERNIZATION PROJECTS AND OTHER

SUSTAINABlLlTY RELATED CAPITAL INVESTMENTS ASSOCIATED WITH PROJECTS IDENTIFIED IN TI-IE PORT OF GUAM MASTER PLAN UPDATE 2013

BE IT RESOLVED BY THE BOARD OF DIRECTORS OF TI-IE JOSE D. LEON GUERRERO COMMEI~CIAL PORT:

WHEREAS, was created hy Public Law 1:I-X7 on October 31, 1975: and

WHEREAS. the Jose D. Leon GuerreJ'l) Commercial Pnrt , through its Board or Directors, has the responsibility to cnsurc sus tainahle operations or the Commercial POJ'l and improve upon serviccs to the people or Guam; and

WHEREAS, on Octoher 22, 2012. the POJ'l filed its 20-Year Financial Plan and 5-Year Rate Plan describing ceJ'lain ncar and long term sustainability projects with the Puhlic Utilities Commission: ami

WHEREAS, on July 19. 2013, the Port liled the Illlerim Tarirr Petition with the Public Utilities Commission that was suhsequently apJlrovedthruugh Order or the Commission dated January 30, 2014, PAG Docket No. 13-01: and

WHEREAS, the Ordering Provisions or Public Utilities Commission PAG Docket No. 15-04 required thc Pnrt to file a multi-year Rate Plan by October 1,2010; and

WHEREAS, the Pnrt recngaged its Owner's Agcnt/Engineer to revisit , update and modiry the CUITent 5-Year Tarirr Petition that was riled by the POJ'l to the PUC on June 1.2015: and

WHEREAS. it has been clearly detcrmined through rUJ'lher financial analysis that there should now be annual adjuslIlll:nts in the PoJ'l's Terminal Tarirr over the next five years in the amount or 7% rm years I ami 2, and a I % increase ror the years :1 through 5. rollowed hy increases to subsequclll years at the ratc or 3.95%; ami

WHEREAS, the Port now moves to adopt and approve the lindings and rccommcndations containcd in the 5-Year Accelerated TarilT Petition Analysis (2017-2021 ) prepared by Parsons BrinckerbolT dated Septembcr 7, 2016: ami

WI-IEREAS, the PoJ'l hereby acknowledges that by doing so, that the ncwly adopted analysis , findings and recoml11endations contained in thc updated repOJ'lmCI1lO sUJlersedcs and complimcnts thc prcviously approved Tarirr Petition

that is paJ'ly to PAG Docket 15-04: now therefore he it

RESOL VED , the Board or Directors hereby adopts the recommendations contained in the report memo analysis and hereby authorize Management to file the modificd 5-Year Accelerated Tarirr Petition ln the Public Utilities Commission allli

to collahorate with the PUC consultants in this rcgard ; and be it rurther

RESOLVED. the Board or Directors ruJ'lher approvc the Tarirr increases in the manner and schedule as detailed ahove and' that any such inereasc shall take crrect upon the approval or the Public Utilities Commission: and be it rurther

RESOLVED , the Board or Directors hereby authnrizes the release or any Public Notice relatcd to this modiried 5-

Year ACI:cierated Tarirr Petition. ir so detcrmined necessary: and be it ruJ'lher

RESOLVED, the Chairman ceJ'liry ln, and the Secretary allestto, the adoption hereor and that a copy or this resolution he sent to the Public Utilities Commission. the Honorable Judith B. Won Pat, Speaker or the 33,,1 Guam Legislature, and the Honorahle Thomas C. Ada. Oversight Chair rill' the Commillee on TranspoJ'lation, Inrrastructure, Lands. Border Protection.

Veterans' AITairs and Procuremcnt.

PASSED AND ADOPTED UNANIMOUSLY BY TI-IE BOARD OF

DlRECTORSTH)S 7'" DAY OF SEI'TEMBER, 2016 b ~

~»?7~- --S - -i---' -::':::....!:..(.:,..(Z ____ =----;/-=_-::-__ ---FRANCISCO G. SANTOS TIMOTHY T. ERNAGHAN

CHAIRMAN, BOARD OF DI RD SECRETARY, BOARD OF DIRECTORS PORT AUTHORITY OF PORT AUTHORITY OF GUAM

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GUAM PUBLIC UTILITES COMMISSION

RATE CASE PETITION

DIRECT TESTIMONY OF

JOANNE M.S. BROWN

ON BEHALF OF

PORT AUTHORITY OF GUAM

Piti, Guam

November 16,2016

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BEFORE THE GUAM PUBLIC UTILITIES COMMISSION OF GUAM

In the Matter of Port Authority of Guam's Petition for 5 Year Tariff Rate Increase

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Rate Case Petition

AFFIDAVIT OF JOANNE M.S. BROWN

TERRITORY OF GUAM ) ) )

JOANNE M.S. BROWN, being first duly sworn on his oath, states: 1. My name is Joanne M.S. Brown. My office is in Piti, Guam, and I am employed by Port

Authority of Guam as its GENERAL MANAGER. 2. Attached hereto and made a part hereof for all purposes is my Direct Testimony on behalf

of Port Authority of Guam, consisting of three (3) pages, having been prepared in written form for introduction into evidence in the above-captioned docket.

3. I have knowledge of the matters set forth therein. I hereby swear and affirm that my answers contained in the attached testimony to the questions therein propounded, including any attachments thereto, are true and accurate to the best of my knowledge, information and belief.

GUAM, U.S.A. ) ) ss

Village of //// )

Subscribed and sworn to before me this /~~ay of ;f/iJ//t.<:;IL/:!367L

Brown. 2016, by Joanne M.S.

JESSICA C. D. GARRIDO NOTARY PUBLIC

In and for Guam, U.S.A. My Commission Expires: JAN. 12,2018

P.O. Box 7693 Agat Guam %928

DIRECT TESTIMONY OF

JOANNE M. S. BROWN

TARIFF PETITION 2016

QUALIFICATIONS

Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.

A. Joanne M.S. Brown. 1026 Cabras Highway, Suite 201 Piti, Guam 96925

Q. BY WHOM AND IN WHAT CAPACITY ARE YOU EMPLOYED?

A. General Manager for the Port Authority of Guam

Q. WHAT ARE YOUR RESPONSIBILITIES?

A. Responsible for the maintenance, operation, and development of the Port Administration and the Port business affairs.

Q. WHAT ARE YOUR RELEVANT QUALIFICATIONS?

A. I have ten years of prior administrative experience in operating as the head of a department or agency in the Government of Guam. I have served six terms in the Guam legislature and was selected and confirmed by the Port Board to serve as General Manager.

Q. PLEASE DESCRIBE YOUR EDUCATION, EXPERIENCE AND EMPLOYMENT HISTORY.

A. I graduated with honors from Notre Dame High School in July of 1983, and went on to attend the University of Guam as a Merit Scholarship Award recipient. During my time at UOG, I was a Peer Counselor, UOG Representative to the Tenth and Eleventh Guam Youth Congress, Regent Scholar, Presidents List recipient, Chiang Kai-shek Scholarship recipient and listed in Who's Who in American Colleges and Universities. In May of 1987, I graduated valedictorian and Summa Cum Laude from UOG with a Bachelor of Science in Political Science. I went on to attend the University of Hawaii at Manoa where I received my M.A. in Political Science in December of 1988.

I began my working career as a Staff Assistant to Governor Joseph F. Ada and served as the Executive Director for the Guam War Reparations Commission in January of 1989. I was then appointed as Deputy Administrator for the Guam Environmental Protection Agency in March of 1991. During this time I also

P AG Direct Testimony- General Manager Page 1 of3

served as an adjunct instructor for Political Science at UOG. In November of 1994, I was elected to my first term in the Guam Legislature, and went on to serve six consecutive terms. I served as the Vice Speaker in the Twenty-Eighth Guam Legislature and Chairperson for the Committee on Natural Resources, with oversight for the Guam Waterworks Authority and the Guam Power Authority. I was also elected during this time to serve as a two term President for the Association of Pacific Island Legislatures.

Since completing my legislative term in December of 2006, I returned to the University of Guam and served as the Assistant Director for Soil & Water Conservation with the College of Natural and Applied Sciences. In January of 2011, Governor Eddie Baza Calvo appointed me to serve as the Director for the Department of Public Works and I was unanimously confirmed to serve as the DPW Director by the 31 st Guam Legislature.

In December of 2012, I was then appointed by the Board of Directors of the Port Authority of Guam to serve as General Manager.

Q. HAVE YOU PREVIOUSLY TESTIFIED IN A PROCEEDING BEFORE THE GUAM PUBLIC UTILITIES COMMISSION OR ANY OTHER UTILITY REGULATORY AGENCY?

A. Yes, on a number of occasions. Prior to my work at the Port, I have appeared before the PUC to address rate issues as the legislative oversight Chairperson for the Guam Waterworks Authority and the Guam Power Authority. Also in my current capacity as General Manager for the Port Authority of Guam, I have appeared before the commission on a number of Port related matters.

PURPOSE OF TESTIMONY

Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING?

A. In support of the Port Authority'S petition to implement the modified 5-year accelerated tariff rate increase. The rate increase comprises the following: 7% for years 1 and 2, and a 1 % increase for the years 3 through 5.

Q. WHAT ARE THE PRIMARY ISSUES BEFORE THE PUBLIC UTILITIES COMMISSION IN THIS PROCEEDING?

A. There are two primary issues that the Port would like to address: 1) The changes to the Port Modernization Program (PMP) and 2) Capital investments associated with projects identified in the Port of Guam Master Plan Update 2013, in this case the H-WharfRevitalization project.

Q. WHAT ARE THE ESSENTIAL COMPONENTS UNDERLYING

PAG Direct Testimony- General Manager Page 2 of3

PAG'S REQUEST TO INCREASE TARIFF RATES IN ITS PETITION?

A. The goal of the tariff adjustment is to ensure that sufficient revenues are available to support the ongoing PMP investments (gantry cranes, yard equipment, TOS, GOS, SLE for wharfs). Institute structured maintenance programs. Prepare for replacement of aging facilities (sustainability projects). Implement Salary and wage increase required by Public Law (P.L.) 30-43. Retain buying power in the face of inflation. And address depreciation of existing and future assets.

The Port was awarded $10 million from the U.S. Department of Transportation's FY2016 National Infrastructure Investments or TIGER VIII Discretionary Grant Program for the Rehabilitation ofH-Wharf.

The Port is looking at future debt service for bonds to pay for H -Wharf to fund the remaining fifty percent (50%) for the full rehabilitation of its facility. The pursuit of debt service for bonds will also be used to construct a new Administration building at an alternate Port location so that the port yard can be expanded to encompass the current Administration building and parking lot for much needed capacity.

RECOMMENDATIONS

Q. WHAT ARE THE MAJOR RECOMMENDATIONS THAT YOU DEVELOP IN THIS TESTIMONY?

A. I recommend that the PUC approve the Port's petition for the modified 5-year accelerated tariff rate increase. The rate increase comprises the following: 7% for years 1 and 2, and a 1 % increase for the years 3 through 5.

CONCLUSIONS

Q. WHAT ARE YOUR CONCLUSIONS ON THE CENTRAL ISSUES ADDRESSED IN YOUR TESTIMONY?

A. With a tariff adjustment of the modified 5-year tariff, the Port will be able to keep up with near-term modernization goals. In addition the port can begin the process of addressing additional infrastructure maintenance and improvements.

Q. DOES THAT CONCLUDE YOUR TESTIMONY?

A. Yes

PAG Direct Testimony- General Manager Page 3 of3


RATE CASE PETITION

DIRECT TESTIMONY OF

FELIX R. PANGELINAN

ON BEHALF OF


Piti, Guam

November 16,2016

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BEFORE THE GUAM PUBLIC :UTILITIES COMMISSION OF GUAM


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Rate Case Petition

AFFIDAVIT OF FELIX R. PANGELINAN


FELIX R. PANGELINAN, being first duly sworn on his oath, states: 1. My name is Felix R. Pangelinan. My office is in Piti; Guam, and I am employed by Port

Authority of Guam as its DEPUTY GENERAL MANAGER-Operations.

2. Attached hereto and made a part hereof for all purposes is my Direct Testimony on behalf of Port Authority of Guam, consisting of four (4) pages, having been prepared in written form for introduction into evidence in the above-captioned docket.

3. I have knowledge of the matters set forth therein. I hereby swear and affirm that my answers contained in the attached testimony to the questions therein propounded, including any attachments thereto, are true and accurate to the best of my knowledge, information and

belief.

GUAM, U.S.A.

Village of_-----'--~__'_m_/ _____ _

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FELIX R. NGELINAN

Subscribed and sworn to before me this _4_-e1 ay of_,,(j._~_~_~~_-_,/»_~_~ ____ 2016, by Felix R. Pangelinan.


In and for Guam, U.S.A. My Commission Expires: JAN. 12, 2018

P.O. Box 76fJ3 Agat Guam 96928

DIRECT TESTIMONY OF

FELIX R. P ANGELINAN


UALIFICATIONS


A. Felix R. Pangelinan 1026 Cabras Highway, Suite 201 Piti, Guam 96925

Q. IN WHAT CAPACITY ARE YOU EMPLOYED?

A. Port Authority of Guam Deputy General Manager - Operations


A. I oversee the, control and compliance, operations, maintenance, engineering and planning divisions of the Port Authority of Guam. It is my responsibility to ensure that the day to day functions are efficiently carried out. I review projects, programs, activities and operations of the following Port Authority Divisions:

• Control and Compliance

• Operations • Maintenance • Engineering • Strategic Planning

Q. WHAT ARE YOUR RELEVANT QUALIFICATIONS?

A. I have 34 years with the Port Authority of Guam. I retired February 2014 as the Harbor Master and returned to the Port as the Deputy General Manager on March 2014.


A. I graduated from George Washington High School in 1980. Began working under the Port Authority on May 1982 as a casual (on call) Equipment operator II, my duties and responsibilities were to operate tractor trailer and forklift in the movement of cargo on and off the ships. I became a permanent employee as an Armed security guard in 1983, my duties and

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responsibilities were to protect life and property of the port, to enforce all local and federollaws that applied to the port and it's properties. In 1989, I applied and became a Safety Tech II, my duties and responsibilities was to ensure the Safety of all port operotions and it's personnel, to enforce all applicable local and federal laws. In 1992/ was promoted to the position of Marine Traffic Controller in the Harbor master's Division, my duties and responsibilities was to control, coordinate and schedule all vessel troffic in and out of Apra Harbor, and to ensure the safe docking of vessels to PAG wharfs. In 2005 I was promoted to the position of Assistant Harbor Master, my duties and

responsibilities was to supervise and oversee the day to day operations of the Harbor Master's division In 2011 I was promoted to Harbor Master, my duties and responsibilities were to ensure the overall safety and security of the port. As the Harbor Master, I was the co-chair to the Area Maritime Security Committee with the USCG Captain of the port. In 2012 I was appointed the Interim Deputy General Manager of the port, while also, performing my Harbor Master duties and responsibilities. As the interim DGM, my duties and responsibilities was to oversee all functionalities and operations of the 13 divisions of the port. In 2014 as the Harbor Master, I retired from classified government position. Upon my retirement I was appointed by the port's Board of Directors as the Deputy General Manager of the port.

Q. HAVE YOU PREPARED AN EXHIBIT DETAILING YOUR RELEVANT EXPERIENCE?

A. No


A. No


A. I am testifying in favor of PAG's proposed 5 year tariff petition.


A. The primary issue before the PUC in this proceeding is the approval of the 5 year tariff petition to ensure that we are financially prepared to make the necessary improvements in the yard to meet the current and future demands of the Port operations.

BACKGROUND

Q. WHAT ARE THE ESSENTIAL COMPONENTS UNDERLYING PAG'S REQUEST TO INCREASE TARIFF RATES IN ITS PETITION?

PAG Direct Testimony-Deputy General Manager Page 2of4

A. The goal of the 5 year tariff adjustment is to ensure that sufficient revenues are available for projected operating costs, projected capital costs based on the 2013 Master Plan Update and debt service requirements.

The port has outlined priority projects as follows; 1. Refurbish access road and H wharf 2. Replacement and relocation of the port Administration building 3. Replacement of waterline in the original yard area 4. Spalling and roof repair to the warehouse I and EQMR buildings 5. Repair of gulf pier pilings

Q. GIVEN YOUR DESCRIPTION ABOVE RELATIVE TO THE NEED TO IMPROVE PAG'S OVERALL

ABILITY TO MEET ITS MISSION - ITS OPERATIONAL OBJECTIVES, TOTAL CASH REQUIREMENTS AND FINANCIAL CONDITION - CAN YOU SUMMARIZE THE REVENUE REQUIREMENTS NEEDED TO ACHIEVE THESE GOALS?

A. Based on the financial analysis performed by our consultants, a 5 year tariff adjustment of 7% for the first 2 years and a 1% for the remaining 3 years is needed from 2017-2021 to ensure the Port will be able to meet our debt service on our loans, fund the capital improvement priority projects for repairs and upgrades to all PAG facilities and meet al/ operational needs and requirements.

RECOMMENDATIONS


A. The major recommendation is for the approval of the 5 Year tariff petition. There are critical facilities at the Port Authority that are in dire need of repair. The most immediate area of concern is H wharf that needs to be upgraded to provide for operational efficiencies. The revenue generated from this 5 year tariff increase will help fund the port's priority projects as stated earlier in this testimony and our debt service to the port's current loans and future bond financing for priority projects.

CONCLUSIONS

Q. WHAT ARE YOUR CONCLUSIONS ON THE CENTRAL ISSUES ADDRESSED IN YOUR

TESTIMONY?

PAG Direct Testimony-Deputy General Manager Page 3 of4

A. We encourage the PUC to approve this 5 year increase tariff adjustment that allows the Port Authority to generate sufficient revenue to cover improvement costs. This additional revenue will support the improvements in the facilities and bring it up to industry standards in relation to terminal productivity. The Port handles over 95% of all goods coming into and leaving our island in addition, the Port serves the needs of the Micronesia region as a transshipment hub.

Q. DOES THAT CONCLUDE YOUR TESTIMONY?

A. Yes.

PAG Direct Testimony-Deputy General Manager Page 4 of4


RATE CASE PETITION

DIRECT TESTIMONY OF

FELIXBERTO A. DUENAS

ON BEHALF OF


Piti, Guam

November 16,2016

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Rate Case Petition

AFFIDAVIT OF FELIXBERTO A. DUENAS


FELIXBERTO A. DUENAS, being first duly sworn on his oath, states: 1. My name is Felixberto A. Duenas. My office is in Piti, Guam, and I am employed by

Port Authority of Guam as its DEPUTY GENERAL MANAGER- Admin. &

Finance. 2. Attached hereto and made a part hereof for all purposes is my Direct Testimony on behalf

of Port Authority of Guam, consisting of five (5) pages, having been prepared in written form for introduction into evidence in the above-captioned docket.

3. I have knowledge of the matters set forth therein. I hereby swear and affirm that my answers contained in the attached testimony to the questions therein propounded, including any attachments thereto, are true and accurate to the best of my knowledge, information and belief.

GUAM, U.S .A. )

~/;r-I ) ss Village of / / ' )

11. 10 It. Subscribed and sworn to before me this~ day of ---L..&_'1)_"_l9_~_'f}_· 8_·7'-____ 2016, by Felixberto A. Duenas.

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ry Public .--____ --=--:--::=-=:-:::;-:-;;;;;~~-, 1/ JESSICA C. D. GARRIDO

NOTARY PUBLIC In and for Guam, U.S.A.

My Commission Expires: JAN. 11, 2018 P.O. Box 7693~ GuIlD 96928

UALIFICA TlONS:

DIRECT TESTIMONY OF

FELIXBERTO ALFRED DUENAS



A. Felixberto Alfred Duenas 1026 Cabras Highway, Suite 201 Piti, Guam 96925

Q. IN WHAT CAPACITY ARE YOU EMPLOYED?

A. Deputy General Manager, Administration & Finance Port Authority of Guam


A. I oversee the Administration & Finance divisions of the Port Authority of Guam.

• Finance - General Accounting, Revenue and Expenses • Commercial- Leases of Port owned real estate • Human Resources • Procurement & Supply • Information Technology • General Administration

Q. WHAT ARE YOU RELEVANT QUALIFICATIONS?

A. My education and work experience are mostly with the Finance and Financial requirements of

an organization. The years I have spent at the Guam Legislature was mostly with Government of Guam Fiscal Year BudgetAnalysis.


A. Montgomery Blair High School Silver Spring, Maryland - Graduated 1968

University of Maryland

College Park Maryland

Bachelor of Science, Business Administration -1972

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July 2015 to Present - Deputy General Manager, Administration & Finance Port Authority of Guam

February 2015 to June 2015 - Deputy General Manager, Department of Administration

January 2011 to January 2015 - GovGuam Retiree

March 2010 to December 2010 - Staff Assistant, Office of the Lieutenant Governor, Michael

Cruz

February 2009 to February 2010 - Budget Analyst for Speaker Ben C. Pangelinan, Office of Finance and Budget

January 2005 to December 2008 - Chief of Staff for Speaker Antonio R. Unpingco, Committee

with oversight on Guam Visitor's Bureau, Veteran's Affairs, National Guard and Port Authority.

November 2003 to November 2004 - ChiefofStaff, Office of Senator Jesse A. Lujan

March 2003 to October 2003 - Project Officer at The Guam Recovery Office

January 1989 to December 2002 - Guam Legislature as Staff Assistant for Speaker Antonio R.

Unpingco; Senator Francisco R. Santos; Senator Herminia D. Dierking; Chief of Staff for Senator Marcel Camacho; Chief of Staff/or Senator Frances E. Santos.

January 1984 to December 1988 - Guam Legislature, Assistant Chief Fiscal Officer

February 1987 to April 1982 - Telephone Loan Interviewer & Loan Expeditor for Navy Federal Credit Union, Washington, DC.

December 1972 to August 1976 - Bank of Guam, Employed with preopening staff and first

employee sent off island for training in International Banking Policy and Procedures.

Q. HAVE YOU PREPARED AN EXHIBIT DETAILING YOUR RELEVANT EXPERIENCE?

A. No


A. No

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A. I am testifying in favor of PAG's proposed multiyear tariff adjustment.


A. The primary issue before the PUC in this proceeding is the approval of a multiyear tariff adjustment to ensure that we are financially prepared to make the required improvements needed to meet our future demands of Port Operations.

BACKGROUND:

Q. WHAT ARE THE ESSENTIAL COMPONENTS UNDERLYING PAG'S REQUEST TO INCREASE TARIFF RATES IN ITS PETITION?

A. The goal of the multiyear tariff adjustment is to ensure that sufficient revenues are available to support a Bond indenture to include cash reserve requirements and debt service's to sustain capital improvements project and salary structure.

Q. PLEASE DESCRIBE THE FINANCIAL CONDITION OF PAG?

A. Condensed statements ofrevenues, expenses and changes in net assets (audited)

2015 201i 2013 2012 Operating revenues 48.4 44.9 41.9 35.2

Operating expenses (32.4) (33.2) (35.7) (31.1)

Operating income before depreciation 16 11.7 6.1 4.1

Depreciation (4.8) (4.8) (4.9) (3.7)

Operating Income (loss) 11.2 6.9 1.2 349

Non-operating expenses, net (880) 7.7 5.9 2.0

(Loss) earnings before capital contributions 10.32 (837) (4.7) (1.6)

Capital contributions - US Gov't Grants 51.6 4.1 4.8 3.7

Increase in net assets 61.92 3.3 93 2.0

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Q. GIVEN YOUR DESCRIPTION ABOVE RELATIVE TO THE NEED TO IMPROVE PAG'S OVERALL ABILITY TO MEET ITS MISSION - ITS OPERATIONAL OBJECTIVES, TOTAL CASH REQUIREMENTS AND FINANCIAL CONDITION - CAN YOU SUMMARIZE THE REVENUE REQUIRMENTS NEEDED TO ACHIEVE THESE GOALS?

A. Our consultants have recommended a multiyear tariff adjustments of 7% for year 1 and 2 and 1 % for year 3,4, & 5 from 2017 - 2021. The revenues generating will be sufficient to meet our goals to secure the required capital reserve, debt service, along with capital improvements need to sustain Port operations.

RECOMMENDATIONS:


A. There are critical infrastructures of the Port that need to be repaired, replaced or relocated. H Wharf needs to be repaired so the Port could use it for passenger vessel arrivals and for RolIon-Roll-off (RoRo) operations. This would allow the main yard to be utilized for container and breakbulk operations.

Repair of Golf Pier Pilings.

The Equipment Maintenance and Repair warehouse needs major spalling and roof repair.

Our Administration building has to be replaced; it is not ADA compliant for employees, tenants and customers.

The original water line has to be relocated outside the main yard. Repeated leaks are disruptive during vessel operations.

The major recommendation is to approve the multiyear tariff adjustment so the Port could secure Bond financing to repair, replace and relocate Port assets. Approval of the multiyear tariff adjustment will provide funds for the sustain ability of the Port's salary structure and future CIP projects.

CONCLUSIONS:

Q. WHAT ARE YOUR CONCLUSIONS ON THE CENTRAL ISSUES ADDRESSED IN YOUR TESTIMONY?

A. We encourage PUC to approve the multiyear tariff adjustment to allow the Port to generate sufficient revenues for the renovation, replacement and repair of Port assets. The renovation to the H Wharf will allow the Port to utilize the main yard for container and breakbulk operations. The arrival of passenger vessels will not interfere with normal daily vessel

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operations, since it will be moved to H Wharf The discharging of Roll-on-Roll-off (Ro-RoJ cargo would be easier at H Wharf

The existing Port administration building has outlived its usefulness. The doors, passage ways, stairways and office space are notADA compliant

The relocation of the antiquated water line from inside the yard to outside will allow smoother transition since we do not have to repair leaks during vessel operations.

The repair of warehouse 1 and the EQMR building will provide the safe and healthy environment for the employees.

The repair of Golf Pier which is where Mobil discharges its fuel and Cemeton discharges its cement dry bulk will give service life extensions to the pier.

Q. DOES THAT CONCLUDE YOUR TESTIMONY

A. Yes

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RATE CASE PETITION

DIRECT TESTIMONY OF

SIMEON DELOS SANTOS

ON BEHALF OF


Piti, Guam

November 16,2016



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Rate Case Petition

AFFIDAVIT OF SIMEON DELOS SANTOS


SIMEON DELOS SANTOS, being first duly sworn on his oath, states:

1. My name is Simeon Delos Santos. My office is in Piti, Guam, and I am employed by

Port Authority of Guam as its ENGINEER MANAGER .

2. Attached hereto and made a part hereof for all purposes is my Direct Testimony on behalf

of Port Authority of Guam, consisting of three (3) pages, having been prepared in written

form for introduction into evidence in the above-captioned docket.

3. I have knowledge of the matters set forth therein. I hereby swear and affirm that my answers

contained in the attached testimony to the questions therein propounded, including any

attachments thereto, are true and accurate to the best of my knowledge, information and

belief.

~~~ SIMEON DELOS SANTOS

GUAM, U.S.A. )

r!/h-1/. )) ss Village of_----'~'_/_ / _ , ___ _

/1 r/t. Subscribed and sworn to before me this /_4f!_ Clay of J/iJ;/I?/~!?/0 2016, by Simeon Delos Santos.


In and for Guam, U.S.A. My Commission Expires: JAN. 12,2018

P.O. Box 7693 Agat Guam 96928

QUALIFICATIONS

DIRECT TESTIMONY OF

SIMEON DELOS SANTOS


Q: Please state your name and business address:

A: Simeon Delos Santos Port Authority of Guam 1026 Cabras Highway, Suite 201 Piti, Guam 96925

Q: In what capacity are you employed?

A: Port Authority of Guam, Engineer Manager

Q. What are your relevant qualifications?

A: 29 years in Port engineering related projects. 5 years with Private Engineering Consulting Firms.

Q: Please describe your education, experience and employment history.

A: ASCE Engineering Technology, 1980 University of Guam. BSCET Civil Engineering Technology, 1984 Oregon Institute of Technology, Klamath Falls, Oregon with emphasis on Construction and Public Works Administration.

5 years in private Engineering AJE Consulting Firm as Project Designer. 29 years in Government Port Authority of Guam, current position Port Engineer Manager

Q: Have your prepared and exhibit detailing your relevant experience?

A: No

Q: Have you previously testified in a proceeding before the Guam Public utilities Commission or any other utility regulatory agency?

A: No

Q. Did you receive assistance with any part of your testimony?

A: No

Q: What is the purpose of your testimony in this proceeding?

A: To support the Port Authority'S 5 Year Petition for a 7% tariff increase in year 1 and 2, and 1% for year 3-5.

PAG Direct Testimony- Engineer Manager Page lof3

Q: What are the primary issues before the Public Utilities Commission in this proceeding?

A: To justify the need of a tariff rate increase, in order for the Port to continue with the Port Modernization Projects (PMP), improvements and long-term sustainability on aging facility.

BACKGROUND

Q: What are the essential components underlying PAG's request to increase tariff rates in its petition?

A: Main component is the tariff rate increase in order to finance the capital projects outlined under the 2013 Master Plan Update, debt service requirements and to be financially self sufficient.

Q: Please summarize the condition of the facilities and equipment of PAG.

A: The P AG F -5 wharf was significantly damaged during the 1993 Guam earthquake, the existing wharf was constructed of steel sheet pile supporting a concrete coping beam with horizontal tie-backs. As a result of the earthquake a 560 feet section of berth F-5 was reconstructed which consisted of a pile-supported structure with pre-stressed concrete piles used to support pre-cast and cast-in-place beams and slabs. An underwater structural inspection of berth F-5 completed in December of 2010 found significant concrete spalling, cracking and delamination at piles, pilescaps, beams and bents. Most recent inspection conducted in February 2012 exhibited sign of worsening condition as a result of continued chloride attack on the reinforcing steel. "Should there be extensive delays in executing maintenance and repair of Berth F-5, PAG should expect that the material condition of the wharf will further change from what is depicted in the current Inspection Report".

The Port currently have approximately 12 Million Dollars of facilities upgrade project that are shelve ready. Currently the Container Yard Striping, Signage and Container Yard Lights Upgrade are in contract. The Container Yard Pavement repairs and Trench Drains will be bidded within the coming months. Furthermore the upgrades to the Fuel Wharfs are on the planning stage.

P AG container yard equipment average age is over ten years old. Continued maintenance and repairs to these old equipment is not financially feasible, since repair and maintenance cost more than the present value of the equipment.

The Port has invested in equipment replacement such as 4 Toplifters, 16 Tractors, 1-20ton, I-10ton, 4-5ton forklifts, 1 Street sweeper and 2 Manlifts. In the FY17 Budget the Port will be ordering 1-20ton, 3-10ton and 5-5ton Forklifts based on our equipment replacement plan. We also will be ordering a Roro Tractor and Trailer for our Breakbulk cargo.

RECOMMENDATIONS

Q: What are the major recommendations that you develop in this testimony?

A: Recommend that P AG move forward and focus on facility improvement and long term sustainability.

PAG Direct Testimony- Engineer Manager Page 2 of 3

CONCLUSION

Q: What are your conclusions on the central issues addressed in your testimony?

A: Funding from the Tariff rate increase will give the Port additional funding to continue its improvements that are needed and capital projects outlined in the 2013 Master Plan Update.

Q: Does that conclude your testimony?

A: Yes

PAG Direct Testimony- Engineer Manager Page 3 of 3

A en ix A

PARSONS BRINCKERHOFF

To: General Manager, Port Authority of Guam

From: Parsons Brinckerhoff

Date: September 7,2016

Subject: 5-Year Accelerated Tariff Petition Analysis (2017-2021)

Overview

Memorandum

This memo summarizes the results of Parsons Brinckerhoffs analysis of the Port Authority of Guam's (PAG) tariff requirements for fiscal years (FY) 2017 through 2021, based on the Port business and capital investment program. The analysis considers the most recent information available about Port cargo throughput, financial results, near-term economic assumptions, and refinements to the Port's capital investment program.

In October 2015, the Public Utilities Commission (PUC) approved PAG's request to increase all port tariffs by 7% effective December 2015, with the exception of the crane surcharge, bunkering, fuel throughput, and waste oil charges. This followed a recommendation by Parsons Brinckerhoff, developed in December 2014, for a 5-year petition increasing rates by 7% annually from 2016 through 2020. However, only the first year tariff increase was ultimately implemented. Thus, a new analysis and tariff petition are required to set rates for 2017 forward .

The 2013 Master Plan Update Report recommended a Port Modernization Program (PMP) and contained a High Level Implementation Plan, a Financial Feasibility Assessment, and an Economic Impact Statement with the following stated goals:

• Modernize the Port in the next five years

• Prepare for a downsized and delayed military build-up

• Provide a balanced focus on improvement and long-term sustainability

• Provide a strategy to secure financial self-sufficiency

Annual tariff increases for the first five years were estimated in the 2013 Master Plan Update to address increased expenditures associated with achieving the following objectives:

• Complete minimum PMP investments (i.e. gantry crane acquisition, service life extension [SLEj for wharfs, upgrade financial management system [FMSj, upgrade terminal operating system [TOSj, and a new gate operating system [GOS)

• Institute structured maintenance programs

• Prepare for replacement of aging facilities (sustainability projects)

• Implement salary and wage increases required by Public Law (P.L.) 30-43

• Retain buying power in the face of inflation

• Address depreciation of existing and future assets

Page 1


Several conditions have changed that affect the proposed tariff rate increase necessary to fully fund the 5-year Capital Improvement Program (CIP) and successfully operate the port through 2021. The analysis is based on audited FY2015 financial and cargo volume data. Below is a summary of key refinements to the assumptions and analysis inputs that affect the results and subsequent recommendations:

• Several of the PMP projects have been completed or are in process. The SLE of wharfs F3-F6 is complete. Work on the TOS is still on-going, with a possible extension of work with a cost potential increase. Upgrades to the FMS are no longer in the five-year CIP as a decision has been made to keep the current system in place for now and evaluate newer technology at a later date.

• At the same time, capital needs beyond the PMP have been better defined. As detailed in this memo, the five-year CIP total has increased by approximately $4.7M, to $57.7M from $53M.

• The previous analysis included facilities renewal and replacement costs of $2.25M per year, assuming that 1.5% of the total approximate facility value of $150M would be invested each year. Better definition of the near-term CIP enables the inclusion of defined projects in the 5-year CIP rather than a general allowance estimate.

• Per Public Law (P.L.) 30-43, salary levels for PAG are projected to increase in the analysis period. As detailed below, these costs are now projected to rise more slowly than previously forecast since PAG has adopted a phased increase schedule through 2019, with no further increases (other than keeping up with inflation) considered in the analysis.

• Near-term inflation has been adjusted to 1 %, down from 3.5%, to reflect recent economic conditions in Guam. This leads to lower operating cost escalation over the five-year horizon.

• For breakbulk revenue forecasts, the historical average of breakbulk tonnage is used as the base figure rather than the last year actual tonnage. This is done to generate a conservative estimate by avoiding the effect of recent changes in breakbulk tonnage.

• After declining by nearly 30% from FY2013 to FY2014, transshipment throughput returned to historical levels in FY 2015 and continues to grow in FY2016. Since it is unclear if this trend will continue, the analysis conservatively grows transshipment from 2015 values.

• All crane-related capital, operating costs and revenues have been separated from other port functions, with the assumption that crane costs will be fully paid using crane surcharge funds. A separate crane analysis has been submitted that takes into account all sources and uses of funds and required financing related to crane operations and capital replacement. The crane revenues include the crane surcharge revenues, which are used to payoff crane operating and maintenance costs, and POLA loan debt service. Excess crane surcharge revenues were previously considered available cash flow for the Port's cash-supported capital projects.

Page 2

PARSONS SRINCKERHOFF

Assumptions

Capital Program

Table 1: Updated CIP (YOE $OOOs); * indicates new project

CIP CapEx Funded Through the USDA Loan

Purchase Replacement and Additional Yard Equipment

Total USDA Loan CapEx

CIP CapEx Funded Through the SLE Loan

SLE Acquisition of Cargo Handling Equipment

Total SLE Loan CapEx

CIP CapEx Funded Through the Bond Debt

Gate Operating System

Replacement of Administration Building

Replace Hotel Wharf and Access Road

Waterline Replacements*

Total Bond Debt CapEx

CIP CapEx Funded Through the Budget

Demolition of Equipment*

Inbound/Outbound OCR Portals and Canopies

Arch itectural/Engineering Services - IDQ

Electrical Work for Additional 56 Reefer Outlets*

Port Pol ice Security Upgrade *

Agat Marina Loading Dock Structural Repair*

Renovations to Harbor Refuge

Upg of Power Sys for IT Off/Genset & Line Conditioner*

Progressive Pavement Replacement all Terminal Yards*

Trailer Chassis Landing Continuous Pad

Yard Lighti ng*

A/E Services for Storm Dra inageand Gatehouse*

Gulf Pier Repairs*

Agat Marina Demolition Dock B*

Harbor of Refuge A/E Design & Env Studies - Ph 1*

Hagatna/Agat Marina WiFi Digital Connectivity*

Demolish Admin Building*

Data Warehousi ng Systems*

Gatehouse CapEx*

LAN Infrastructure Upgrades*

Total BudgetCapEx

Total CIP CapEx

li~-(' "

~P,l7

1,318

1,318

2,000

2,000

-

555

555 -

1,110

-

-

500

500 -

-

-

-

150 -

-

250 1,000

250 -

--

-

-

-

2,650

7,078

liJI I ' ~\ om; rIfI1;

10:: ~Q18~1 1 Iii I ' 201~L'

256 -

256 -

- -

- -

- -

5,000 5,100

1,504 12,134

3,000 -

9,504 17,234

758 765 - -

1,125 1,125 - -

200 -

750 750

100 -

35 -400 400

- 1,390

725 -

- -

1,000 -

- -

120 -

150 -

- -

- 350

500 -

- 300

5,863 5,080

15,622 22,315 Note: PortIOn of Hotel Wharf cost funded by $10M TIGER grant IS not Included In Table 1.

Page 3

0 '!;'t

,~?:'Q?:'9~ . ~92" ~

- -

- -

- -

- -

1,184 1,268

5,203 -

- -

- -

6,387 1,268

- -

335 -1,125 1,125

- -

- -

- -- -

- -400 400

- -

- -

- -- -

- -

- -

- -

- 1,600

- -

- -- -

1,860 3,125

8,247 4,393


Port CIP projects for the next five years (both modernization and sustainability) funded by existing loans, future bonds, and the PAG budget projection are indicated in Table 1 above. In addition to the existing equipment and SLE loans, new debt issuances would be required to fund approximately $32M in projects for the GOS, replacement of the Administration Building, renovation of Hotel Wharf and access road, and waterline replacements. The remainder of the CIP includes capital expenditures of approximately $18.6M to be funded from general cash balances. The five-year capital program for FY2017 -2021 covers total expenditures of $57.7M, compared to about $53M for FY2016-2020 in the previous tariff petition. The $10M in funding from the TIGER grant awarded to PAG for Hotel Wharf has been deducted from the CIP in Table 1.

Throughput Volume

In this tariff analysis, cargo volumes are forecasted using organic growth rates, which are limited to the anticipated population growth on Guam and the Micronesia region. Table 2 below summarizes the Port's historical throughput volumes ..

Table 2 Historical PAG throughput (Tons of Breakbulk, Container Count for Local and Transshipment)

OJ! OJ! II

~ Historical 2001 2008 , 2009 2010 2011 2012 2013 2014 2015

~ Average " ,1lo.'J> "'~ 0 "

-

Through~ut Volume Containers 99,620 99,908 94,073 96,952 96,065 92,747 90,803 85,696 90,762 94,070

Transshipment 31,854 30,962 29,107 30,673 30,211 28,889 25,382 19,445 25,940 28,051

Breakbulk 141,098 126,521 125,192 186,523 125,987 167,673 164,650 183,513 233,541 161,633

The organic growth assumptions are as follows:

• All containers (local and transshipped) grow at 1.1 % per year through 2019, and 0.9% onwards.

• Breakbulk grows from the historical average at about 1.15% in 2016, and gradually declines to about 0.96% onwards.

Operating Costs

Staff salary increases were provided through 2019 by PAG consultant Alan Searle & Associates, as summarized below. For the remainder of the analysis period, salary expenses are expected to increase at the level of inflation. Planned salary adjustments have been revised as follows:

Table 3: PAG Salary Forecast 2016-2019

'3 201.~ ~()t7 .. " " ~Q1!J ~Ot~

I Annual Salary (prior to Overtime) $15,602,517 $16,866,603 $17,372,601 $18,483,927

All other operating costs are assumed to grow from their 2015 levels at 1 % per year through 2021 , which is consistent with the recent inflation rate experienced in Guam.

Debt Service and Capital Costs (CapEx)

Certain capital costs are projected to be funded through debt issuance:

Page 4


• PAG has outstanding loans from the Bank of Guam for SLE projects, including the purchase of the TOS system and cargo handling equipment, as well as two loans backed by USDA for cargo handling equipment purchases1. Loan terms are extended over 10 years for the SLE and 15 and 7 years for the USDA loans. Debt service is approximately $1 .5M for the SLE loan and $689,000 for the USDA loans.

• Per the recommendation of PAG staff and after consultation with the Guam Economic Development Association (GEDA), PAG expects to issue 30-year general port revenue bonds in FY 2017 to provide funds for key capital projects. These projects include the GOS, Hotel Wharf and access road, waterline replacements, Administration Building, and, potentially, Gulf Pier. Although specific details of the bond financing have yet to be determined, the following assumptions were made on the bond financing for the purposes of this analysis:

o Interest on these loans is capitalized for two years during the construction period (i.e., added to the bond issuance amount)

o Principal is assumed to be delayed for two years from issuance

o Interest rate of 5.9% is assumed on debt issuance

• All other PAG project costs, with the exception of gantry cranes funded through the crane surcharge, are assumed to be paid for by the annual cash flows of the port through its CIP budget.

The table below summarizes the uses of funds for the projected 2017 debt issuance.

Table 4 Summary of Debt Issuance

Debt Issuance Cost Description Amount

Net Bond Proceeds Capital Projects $35.5 million

Issuance Cost 2% of issuance $844,000

Debt Service Reserve 2% of issuance $844,000

Capitalized Interest Two years $5 million "

Total Issuance ,$42.2 million ,

Annual Debt Service Begins in 2020 $3.1 million

Note: If Gulf Pier is included in debt issuance, total issuance will be $44.6 million and annual debt service will be $3.3 million.

Operating Reserve

In keeping with good financial management, PAG has adopted a policy goal of maintaining an unrestricted cash reserve equal to three months operating costs (O&M Reserve). Based on current O&M expenditures, this translates to approximately $8M in reserve funds. The PAG has estimated that its current level of management reserve is $4M. The O&M Reserve could be built up over time in the next three to five-year horizon. If this is acceptable to PAG, then the annual variable tariff increase shown in Table 5 accumulates sufficient balances to meet the operating reserve requirement. However, building up the operating reserve earlier would contribute to achieving an investment-grade bond rating when the Port issues debt to finance its CIP.

1 POLA crane loans are repaid using crane surcharge funds and do not impact the tariff analysis.

Page 5


Recommended Tariff Increase

Parsons Brinckerhoff analyzed the 5-year financial projections for the Port, including all projected operating revenues and expenses, debt service for current and future debt, and pay-as-you-go capital costs. The analysis assumes that the potential tariff increase is implemented in June 2017. In the absence of a tariff increase, the port would face annual cash flow shortfalls from FY2017 -2021 .

The prior Parsons Brinckerhoff analysis recommended 7% per year for five years, the first of which was implemented in December 2015. Parsons Brinckerhoff recommends a 7.0% increase in FY2017 and in FY2018, followed by a 1% increase per year through FY2021 to allow the Port's revenues to keep up with inflation. The results are summarized in Table 5. This tariff accomplishes the dual goals of ensuring that the 5-year CIP plan is funded and the 3-month O&M reserve is accumulated by 2020 or earlier. It would also potentially provide funds to move to a more efficient debt structure with less interest capitalization.

Table 5 Recommended Tariff Increase

FY2017 FY2018 FY2019 FY2020 FY2021

($M) ($M) ($M) ($M) ($M)

Variable Tariff 7.00% 7.00% 1.00% 1.00% 1.00%

Net Cash Flow 0.53 2.52 2.46 2.21 1.62

Cumulative Cash Flow 0.53 3.05 5.51 7.72 9.34

We further recommend an annual update of the tariff analysis that considers the most recent cargo throughput and operating costs. Because the financial results depend directly upon cargo growth, it is critical for the Port to monitor cargo volumes and operating costs. We recommend communicating regularly with the military and shippers regarding their short-term forecasts, and reporting these to management at all meetings relevant to planning budget and CIP investments going forward .

Page 6


Summary of Sources & Uses of Funds and CIP Capital Projects

The following table provides additional details about the sources and uses of Port funds in the recommended annual tariff increase case (7% increase in 2017 and 2018,1% in 2019-2021).

Table 6 Port Sources & Uses (YOE$ x 000)

1II'"'1»iI' '. "" ,'"

I ~ .p.

I ~ ~917 . ZQ~~ ~Q;1,9 .... ~P~9 Total Sources

Operating Revenue 35,404 40,276 41,126 41,918

Commercial Revenue 9,450 10,751 10,978 11,189

Other Revenue 44.5 2,572.7 2,586.1 93.2

Total Sources 44,898 53,599 54,690 53,201

Total Uses

Labor Expenses 27,332 28,152 29,953 31,011

Other G&A Expenses 9,500 9,595 9,691 9,787

Facilities Expenses - - - -

Equipment Expenses 2,682 2,736 2,792 2,843

Debt Service on Outstanding Debt 2,206 2,206 2,206 2,269

Debt Service on Planned Debt - 2,507 2,507 2,507

ClP CapEx Budget 2,650 5,863 5,080 1,860

Equipment CapEx Budget - 22.6 - 98.7

Total Uses 44,370 51,082 52,229 50,377

Net Cash Flow 528 2,517 2,461 2,824

Page 7

~~.921

42,725

11,405

107.7

54,237

31,011

10,133 -

2,968

2,269

2,470

3,125

-51,977

2,261


Tariff Petition Timeline

9/12/2016

9/7/2016

I~;t -~~;chf~;-~~~~~~-(~~t-required) .. ~~~~!~~rii~ j-- ---j----f----+---+-----I-----+----l

A en ix B

• en IX

PORT OF GUAM ATURIDAT I PUETT ON GUAHAN Jose D. Leon Guerrero Commercial Port 1026 Cabras Highway, Suite 201 , Piti, Guam 96925 Telephone: 671-477-5931 /35 Facsimile: 671-477-2689/4445 Website: www.portguom.com

MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS

Wednesday, September 7, 2016

I. CALL TO ORDER

Eddie Baza Calvo Governor of Guam

Ray Tenorio Lieutenant Governor

There being a quorum, the regular meeting of the Board of Directors was called to order at 11:50 a.m., Wednesday, September 7,2016. Present at the meeting were:

Francisco G. Santos, Chairman Oscar A. Calvo, Vice Chairman Melanie R. Mendiola, Member Joanne M.S. Brown, General Manager Felix R. Pangelinan, Deputy General Manager (Operations) Alfred F. Duenas, Deputy General Manager (Admin & Finance) Atty. Theresa Rojas, Co-Counsel

Absent was Board of Director Timothy Kernaghan. Also present was Office of Senator Tom Ada-Peter Tran; Parsons Brinckerhoff-Shannon McLeod, Louis Wolinetz, Robert Johansen; PNC News-Janela Carrera; KUAM-Ken Quintanilla, Whisper Dela Cruz; Glimpses PublicationLara Ozaki; Guam Post-John O'Connor and Port Management staff.

II. NEW BUSINESS

1. Port Terminal Tariff Petition: By way of background, and through the Ordering Provisions of the Public Utilities Commission (PUC) PAG Docket 13-01 of January 30, 2014 required the Port to seek approval of its 5-year rate plan. In doing so, the Port reengaged its Owner's Agent/Engineer, Parsons Brinckerhoff, to update the 5-year tariff petition and based on the financial analysis determined that there be an adjustment in the Port's terminal tariff of a 7% annual increase in each year from 2016 through 2020. However, at that time of March 2015 through Resolution No. 2015-01, the Board only approved a one time increase of 7% and subsequent proposed annual increases for the remaining four year of the petition shall be subjected to further financial review and approval of the Port Board. Upon further rate petition filing with PUC transmitting Resolution No. 2015-01, the Ordering Provision of PUC PAG Docket No. 15-04 required the Port to file a multi-year rate plan by October 1,2016.

The General Manager mentioned that Parsons Brinckerhoff has since updated the financial analysis and determined that the annual adjustments in the Port's terminal tariff over the next five years would be 7% for years 1 and 2, and a 1 % increase for years 3 through 5. Board consideration is now being requested to adopt the findings and recommendation contained

---- -- --, ---- -----------------------------------------------Port of Guam, Jose D. Leon Guerrero Commercial Port is an Equal Employment Opportunity Employer.

Complaints of discrimination should be sent to the Human Resources Division.

PAG Board of Director.> Regular Meeting August 31, 2016 Page 4 of4

b. FY2016 Federal Funding Summit Seminar, October 19-20, 2016, Austin, TX: Director Kernaghan made motion to approve the travel authorization request as presented or as otherwise designated by the General Manager, seconded by Director Mendiola. The motion was unanimously approved.

VII. ADJOURNMENT

There being no further business to discuss, it was moved by Director Kernaghan and seconded by the Vice Chairman to adjourn the meeting at 12:35 p.m. The motion was unanimously passed.

APPROVED BY:

j FRANCISCO G. SANTOS, Chairman Board of Directors

NAGHAN, Board ecretary Board of Directors

A en ix D

PORT OF GUAM ATURIDAT I PUETTON GUAHAN Jose D. Leon Guerrero Commercial·Port 1026 Cabras Highway, Suite 201, Pit i, Guam 96925 Telephone: 671- 477-5931 /35 Facsimile: 671- 477-2689/4445 Website: wwwp orr9110111.COl1l

November 8,2016

MEMORANDUM

TO: All Shipping Agents and Port Users

FROM: General Manager

SUBJECT: Free Time Period - Export (Full, Transshipment & Empty)

.;(':::'\J~ .~>\ Eddie Baza Calvo

: GU\t,\M i Governor of Guam \ t • ." A .".,....( .' ',"-r.~ ' ... . Ray Tenorio

. :.~ 7.i~} lieutenant Governor • ! '~ " :. "~ t-O

On October 17, 2016 the Port went live in the new Terminal Operating System (TOS). This system

replaced the Graphical Terminal System (GTS). One of the benefits of the new TOS is that many

functions are automated such as the assessment of storage fees. Storage fees will now be billed with

the vessel invoice (un it invoice).

Terminal Tariff, page 37, Section IV, Item no. 28 states "Free Time is computed from the first working

day at 8:00 a.m. occurring after freight is received or unloaded on the wharf or wharf premises, or in

case freight is from a vessel, from the first working day at 8:00 a.m. occurring after vessel completes

discharge". As a result of the TOS system the system captures the date stamp which is the actual time

exports are received and tied to the billing which automates the calculation .

Therefore, effective November billings for export storage, the Free Time will be computed from the

actual time received. Based on the category type the number of free time will remain the same.

Example : Export Full 20' Reefer

Received (Gate In) 10/18/161150

Loaded (Last Move) 10/23/160244

Free Period 10/18/16 1150 to 10/20/16 1150

Calculated Storage: 3 days (10/20/16 1151- 10/23/16 0244)

Should you have any questions, please feel free to contact, Mrs. Joann B. Conway, Acting Financial

Affairs Controller, at 477-5931-4 ext.352

General Manager

cc : Deputy General Manager, Admin . & Fin .

. - --_ .. _-_._._----- ._ .. --_._ .. _--Por t o f GUilfn. Jose D. Leon Guerrero Commercial Port is iln Equal Employment Opportunity Employer.

CO lTlp lil ints of discrimination should be sent to the HUlTliln Resources Division.

A en ix E

TO:

FROM:

SUBJECT:

PORT OF GUAM .' rl v /(If) .'rr / I' lJUTON ( ;U.' III /1N

.Iose D. Leon Guerrero Commercial Port 1026 Cabras Highway, Suite 201, Piti , Guam 96925 Telephone:671-4 77-5931/35 Facsimile:671-477-2689/4445 website: www.portguam.com

September 7, 2016

P011 Authority of Guam Customers

General Manager

General Notice - Five Year Tariff Petition

., 1' .. : •

··/~~~f:,: ,;~, ., ... /. ,

Eddie Baza Calvo Governor of Guam Ray Tenorio Lieutenant Governor

The Port Authority of Guam (PAG) wishes to advise its customers of its intent to file a five (5) year petition with the Public Utilities Commission in connection with PAG Docket 15-04. The P011 will be requesting for upward adjustments to its tariff service rates, excluding the crane surcharge bunkering/fuel/throughput waste oil rates, in the amount of 7% for FY20 17 and FY20 18, followed by a I % increase through 2019 to 2021.

The purpose for this proposed rate adjustment is to generate adequate revenues to support Port operations, fund capital investment program of the P011's Master Plan which include, but not limited to, the revitalization of Hotel Wharf, construction for a new Port Administration and Commercial Building, the replacement of the antiquated domestic waterlines within the public cargo terminal, critical repair and renovation of Golf Pier and build up the P011's operating reserve to help achieve an investment-grade credit rating for the expected bond issuance.

After the filing is made, the Public Utilities Commission will review the petition and schedule a time for the rate case to be presented to PUC Commissioners. Incidental to this process, the general public will also be given the opportunity to provide testimony to the Commission at public hearings. PUC will notify the public of the specific dates upon which the hearings are to be held.

The notice of the established rate request may also be viewed at the Port Authority's Administration Office or by visiting our website at www.portguam.com. Independent of the PUC process described above, your input is still important to us; any/all comment(s) related to this matter certainly are welcomed and can be sent to [email protected].

Cc: Deputy General Manager, Operations Deputy General Manager, Admin & Finance Acting Financial Affairs Controller {]f-'

Port of Guam, Jose D. Leon Guerrero Commercial Port is an Equal Employment Opportunity Employer. Complaints of discrimination should be sent to the Human Resources Division.

A en ix F

r--------------------------------------------------------------------------------------------PORT OF

~ PORT OF GUAM

ATURIDAT I PUETTON GUAHAN Jose D. Leon Guerrero Commercial Port

1026 Cabras Highway, Suite 201, Piti, Guam 96925 Telephone:671-477-5931/3,5 Facsimile:671-477 -2689/4445

website: www.portguam.com '

NOTICE TO THE GENERAL PUBLIC

Eddie Baza Calvo Governor of Guam

Ray Tenorio Lieutenant Governor

17

The Port Authority of Guam (pAG) wishes to advise its customers of its intent to file a five (5) year petition with the Public Utilities Commission in connection with PAG Docket 15-04, requesting for an upward adjustment of 7% in FY2017 and FY2018, followed by a 1 % increase through 2019 to 2021 to its Tariff service rates, excluding crane surcharge and ::: , bunkering/fuel throughput/waste oil rates. The purpose of these rate adjustments is to generate adequate revenues to address expenditures associated with the Port operations, the ~ capital investment program in the Port's Master Plan and build up the Port's operating reserve to help achieve an investment-grade credit rating for bond issuance. ~ rAfter the filing is made, the Public Utilities Commission will review the petition with its supporting documentation and schedule a time for the rate case to be presented to PUC (/) 'commissioners. During this time, the public will be given an opportunity to provide testimony to the Commission on three different hearing dates throughout the island. PUC will notify ~ . the public of the specific dates upon which the hearings will be scheduled. The notice of the established rate reques~ed by PAG may also be viewed at the Port"Authority's Administration :s: Office or on its website, at http://wwW .. portguam.com. Any public or customer comments concerning the rate adjustment may be submitted to the PAG at the address indicated above fg or email [email protected] ~

JOANNE:M.S. BROWN General Manager

PORT AUTHORITY OF GUAM TARIFF RATE TABLE

5TlJFf IMP/EJUI!EMP CONTAINER - HANDlING

Cumont .... sruFF1Mf"/EXP/EMPCOHT;'INEft-STEVEOOfIE 127.58

STtVtOOAE" HAHOUNG RATE FOR MflUG£RATm CONTAlHEItS tMREFftlGflVl're01MP/EXP-HANOLING 262,0'1 UVEREffUGERATEOIMP/EXp·mVEOORE 127.sa

TOTAL 3M." P;EAI(&UUC & UfT OFF/ON vtHlClES &REAKDUlKtMPORT/EXPOf\T-HANDUNG 10.21 M£A/(!UUC:IMPOftT/£XPOftT-STtVEOOFUNG 16.119

UNIT!ZEDIMP/EXP-STEVEDORE UNITlZEOIMP/EXp·HANOlING 8.51

18.39 20.13

'" 7% 136.51 146.06 150.49 FOflvtSSESlSOf1,OOO~TOHSANOUNOER

FOO VESSELS 8£lWEEN 1,OOOTO 2,OOOGft055 TONS

FORvtSSELSOVER2,OOOGROSSTONS,S57.91tS61.%~U5AN

AOOfTlONAlCHARGEPfftEACH2,OOOGROSSTONSORFRACTlON

300.43 309.52 THfREOfIHEXCESS0f2,OOOGitOSSTONS 7% 136.51 8.93 146.06- 150."9 HOTWORX PERMIT

-- -- -;;:; 460.01 ==:~~~=nIES 7% 10.92 7X 18.07

12.04 EQUW'MENTREHTAl

~! ~ ~~!::~RGfR 31.01 31.95 CRAHE,GAHTRY,H[AVYlIFlS

7%

7% 9.11 9.75

1.49 7% l.29 2Hl6 7% 23.05

7% n.oo 7% 32.51 3478

48.69

7% 195.02 7% 195.02

0.18 291 -_._-

1% 49.61

59.71 7" 63." 3.2S 4.18

Tl\ANSSHfPMfNTSlUfF(20',40'&"S')lSTCARIUER

IMPOfITCONTTAANSSH/PMENTSTUFF IMPOftT RElURNING EMPTY TRANSSHIP lMPORTEMPTYTRANSSHI? OVEltSTOWCONTAlNERI20'.40'&45')

lMPOfIT!EXPORTOVERSTOW CONTAlNER (20',40'&.4S') SH1FTEDCQNTAlN£ftI2O',40'&45'j IMPORT/EXPORT SHiFf CONTAINER (20',40'&45')

R£HANDlECONTAINER

REHANOlE,OVEPSTOW,ORSH1mOHAZMATCOHTAlN(RS

REHANOlE.OVERSTOW, OR SHfFTEO Il:EEfERCONTAINERS snClAl RfGGING (20',40'&45')

12.33

7%

'"

'"

34.39 ·'13.99)

5.07 5,90

WElDERS

!MI!Il!\!!i ACCOUNTT€eHHICIAN AUTOMEO-IANICS CARGO CHECKERS •

CARPENn:R5

CAANEMECHANIC CAANEOP£RATOft

tMPOf'IT/fXPORTAll SPECIAL RtGmNG Of CNTR WHM;FAG£MTES WHAIIFAG€EMP1YCONTIMPORT"'25~20'CONTAINER)

WHARFAGE EMPTY CONT IMP>25 ~-4<Y & 45' CONTAINER) WHARFAGE TMNSSHWMENT TUNA WHARFAGEMEAX8UIJ(IMPORT

4.25 7% 4.25 nIi

0,'"

0.'" 5.02 PlUMl£I\S

S.02 ::;veMAnfl.MECHAHlC WHAAFAGE BftEAKBUlK EXPOftT/AU OTH£A CARGO WHAAFAm; EXI'OftT CONTAlNER STUfF!2O' CONTNNffl) WHARFAGE EXPOftT CONTAINER STUFF (40' 1t"5'CHTft)

WHAAfAGE IMt'Of\TCONTNNER STUfF (2O'CONTAIN£RI WHMFAGEIMPQftTCQNTAINERSTUfF(40' .... S'CNTR)

WHARfAGE PWEUHES/HC)SB ·IHIOUNQ WHAN'AGf: PWELIHES/HOSES - OVTIOUNO WHARFAG£~T/EXPORTDRYIUlJ(CARGO

1M..INK!IUN6/fU1ltftOOGtIPUT/WASTlOfl IMPOfI.TTH«OUGHf'UT

FiIDM TJil;UCK TO vtSSElWHEH SERVICED AT PORT PIERS otftECTTOOftFROMV£SSElTHfW~ATELYOWHED Pff'EUN£ lOCATED ON POfI.T I"I\OI'ERTY

'" '" 7% 41.38 67.« 7% 76.06 1%

0,"

0."

'" ""

"" '"

".87 2,"

•. 25

.,"

0.2" 0,,.

SAfETY OffICERS

WElDEftS

llIJIlfBI!III!W ACCOUNTTECHHfCLAN

1.13 0,66

1.U EQIJtfOM£NTOttEMTOR

~ .. _...,..".,m MARITIME SEC. III/UNmZEO 0.12

MA.RJT1M£SEC FEE IlUHJ:EAIHG 0.02 MAAmMEseC.FEESTUfFEDIMPOftT/EXPOftT 2."3 MAftrTIMESEC.EMf'TYCOHTAtNfR 0.51 MAlUTlMESEC,PASSENGERVESSEl.cr-memblm.(ooetime ch¥Je) & PISHnpfS

MAAlTIME SEC. FEE RO/ftO 1.21 MARmMESEC. 8ULKSANO/SOW'/AGGRE 0.Q2

MAftfTlME SEC.V£SS-El DOCKAGE 5" FUflSUllOWlGf LOAOED COOTAiffERS IMPOfIT!£XPORT eMPTYINOOUNo/OUTDOUNOCONTAINt:R lo.t.DEDTAANSSHlPM£NTCONTAm£R EMPTY nv.NSSHIPMfNT CONTAtNER

FACllIlYMAtNTENANCECHARG£'IMP{fXP/TSIM~CNllI)

FAOUTY MAUm:NANCE CHARGE·IMP!EXP/TS 1Mf!(88)

CAANESURCHAAGE-FUllIMflm,T/EXPOftT{T5 CflAHESURtHAftG£·8-REAlCIJUlXIPERREVENUfTON) DfMUIIMG. rn:MUftAAG£·GAEATERTHAN20'(-40'&4S'}(~6-10)

rn:MUftRAGE-GI\EATERTHAN N (-40'& 45') (Each Daythereafterl 102.08 OEMURRAGE CONTAINER EMPlY 8.51 0\ffi10E WMEHOUSE DEMURRAGE IREAX8UlK

INS!OEWAREHOUSEOEMURRAGEBllEAKlUlX REfRIG{RATEDCTDEMUMAGE(DAY3-4J REFRIGEAAT£DCTO£MURMGE (Each Dayth~after)

DEMURRAGe 20' CON'TAlNERltny G-10) D£MUflRAGE2O'CONTAINER(EKhOayt~NI

8ARECHASSISSTORAGE HA1.MOOOSCONTAtHEII,(ClASS1-l)(OtherttwMCOC)

20FEETOR LfSS {DAY 3-4)

2OfEETORlES5(EACHDAYlHEREAffill.)

OVEfl 20 FEET (DAY 3--4)

~~~e:=OAYTH£REAfTER)

".

'" '" '" '" 7% 0.03

5~

7.25 nIi 7.25

'" '" 7% 31.4(

'" L70

"" ""

'" '" '" '" '" 7% 112.00 7% 27.31

'" '"

0.(7

0.47

7.16 0,60

0,85

"8

0.03 2.78

7.76

15.52

125.00 5,00

7X 1.06 17.91 ".25 7% 0.30 4.17 5.02

lCOR-UNEHANOlINGO(fUf>TO 600 Ff lOA LeOR - UHE HANOlING OfT OVER 600 FT LOA lCOil-UNEHAHOUNGS(TUPlOfiOOFTlOA lCOR-UNEHAnolINGS/TOVER600FTlOA OUT OF GAUG£CAflGO (OOG) UNPlUG/PlUGREFRIGEMTEOCONTAlNERS CHASSIS CHANGE WATER CONNECT/OISCONNECT OOl\OAY!OT WATERCONN-ECT/DlSCONNECTREGUtAR REGULM WATER CHARGE (Imed OIl GWA) f>QWfRCONNECTlONCI-fAftGE 5UWETIRINSl'Al.lATlON

59.S5 '" 68.18 7% 33.28

729.03 1X 51.03 364.52 417.34

7% 556.«

'" 36.4S 39.00 2.55 41.73 "2.99 97.20 7% 104.00 6.80 111.28 114.65

7% "5.51 48.70 SO.17 0% 20% 20% 20%

'"

'''' ..... IIS PftMHTMMNNT. MEOWOC

DlESflWOIANIC ELECTR1CJAH EQlHPMfHTOI'EAATOR PAINTERS PlUMfl£1tS P'fI.MNTMMAlNT.M£eHANIC

WEUl£R5

~ ACCOUNTTECIiNtClAN

OIES£1.MEOiANIC ElECTRICIAN £QUlf'MENTOf>EAATOR

41.31

41.31

47.89

48.36 37.96

7% 32.51 7% 66.'00

'" '" ".

'"

'" 7% 72.81

I" ~.oo 7%

'"

7%

1%

30.84 7%

5548

G09()

44.43

".84

56.94 46.26

77.63 GO.15

"5.51 ...... 71.76

25.47 31.92

20$6

36.99

2.53 2,06

'"

7%

" '" 7% 51.24

7% 4/.07

'"

'" ,. '" 7% 49.50

7% 89.05

7'/1, 97.74

7% SO.7"

7% 72.16

7" 76.89

'" '" '" 1% 71.30 7% 83.20

'" '" '" '" ]X 16.50

7% 29.5&

'" '" '" 7% 25.62 1% 23.54

'" '"

'" '" '" '" "" 7% "3."3 7'" 35.89

'" 7% 28..61 N 32.38 7%

7S 7% 34.67

7% 21.64

'" '" 3.41

7% 3 ... 5

'" '" '" 7% ".34 7% 3.60

'" '" '" '"

3.23 2,06

8.47

0.30

1.70 2.98

"",2 .... 3".79 70,'"

48.70 8346

_5 ....

WELDERS __ l'l.lIAID

34.66 Q.£ANING SHtP'5 OIL TANKS(Hatch OoIy) 10.30 REEFER CARGO 1"*1ch & container Work)

HANOlIHGNOXIOOSCAAGO{HatthWOfk)

SAGGED CEMENT (HatchWoricj

SCAAPMETAlCARGO(HlitchWorkl AMMUNl1iON OR EXPLOSIVE CARC,Q BUlKCEMENlfHatchWork) DOCl(A.GE(O¥eraIIlenfthofVM$IIIInFflrt) 0·100

43.00 100-150

7.34 150-200

1"2,78 5.09

54.82 56A9

3.39 55.37 2.66 43.46

2.16 35.31 3.88 6352

63.52 6S.44 426 71.83 3.52

335 54.82

S.83 6,,.

5.43 4.21

so 36

34,73

SO.86

7S.55

"' .. ".66 .7fl.29 5 ..... 89.02

1.33 1,01

1." 1,,.

>.70 1.06

1.87 2.12

1.42

2."

0.18

0.1"

29.63 22.95

36.54-36.91

"'7 ,. .. 0

3.65

'.59

56.49

~~::! :: PERMITS fOR PROFtT-OPERAllONAl VENDOR AHMUAt FEE

35.78 IGftOSSSAlES) SO-S5O,000 $50,001·$149,999 $150,000-$249,999

$250,000+

NEWVEN~

85.57 RECREATlONAl(81-ANNUAl)

67.17 FAMtlYBEACHFACIUTYf£ES 54.57 QflENSPACE PlCNICXING!CANOf>Y{I'ERDAVI

ilEFUNDABlfCtEANINGDEPOSITP€RDAY(1-5QPf1ilSON5)

REFUNDMlE CLEANING DEP05IT PER DAY !51+ P€RSON5)

POftT B£ACH FAOUTY US

71.60

91.72

28.52 22.39

32.72

32.72

17.90

'16.19

;3.97

".01

3.57 3.76

OPEN SPACE PICNtCKIHG/CANOPY(P£R DAV) PAVILION

RnUNOABtEClEANINGD(POSITPERDAY(l-50PERSOHS)

ftEFUNOABlECLEAN'NGDEP05ITPERDAY(51+P[P.5ONS}

c ...... .... ),2" 2.02

'" 7% 3.47

7% 116

'" '" '" '" '" '"

7% 48.11 7% 71.50

'" 7% 166.42 7% 244.42 7%

7%

7% 445.9-1

7% 492.76 7% I" 594.16 7% 6SO.OS

'"' : ~:::: 0% 100.00

'.86 7.43

.f'J

5 Year Tariff Petition - Constant...

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