GAO was asked to review the Island-Wide Power System on Guam, which is jointly operated by the Navy and the Guam Power Authority. The Navy and the Authority entered into a formal agreement providing for the pooling of power generation and transmission facilities and prorated cost sharing. The Power Pool Agreement, as orginally formulated, was to be a short-term arrangement to permit the Authority to demonstrate that it could successfully operate the system and eventually assume operational control of the entire system. The Authority has experienced financial difficulties and transfer of operational control has been delayed. The Government of Guam claims that the agreement is inequitable and has been the primary cause of the Authority's financial problems.
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