GUAM POWER AUTHORITY

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1 Guam Power Authority Revenue Bonds, Series 2014 A, $76,470,000, Dated: September 30, 2014 Guam Power Authority Revenue Bonds, Series 2012 A, $340,620,000, Dated: October 18, 2012 Guam Power Authority Revenue Bonds, 2010 Series A, $150,440,000 and Guam Power Authority Subordinate Revenue Bonds, 2010 Series A, $56,115,000 Dated: July 1, 2010 Principal Existing Resources Description of any material change to the description of the generating units owned or contracted for by the Issuer or the transmission and distribution system of the Issuer There were some material changes to the description of the generating units owned or contracted for by the Guam Power Authority (GPA) during the year. On November 12, 2014, the Consolidated Commission on Utilities (CCU) authorized GPA to proceed with the deactivation of the two Dededo Combustion Turbine units. Unit #1 and Unit #2 had been out of service since December 2010 and May 2004, respectively, for a number of mechanical and environmental compliance issues. Because of the costly expenses needed for repairs and compliance with new EPA regulations, it was determined to be in the best interest of the Authority to deactivate the units which supplied 45MW total at their peak. This process, however, was changed within the year. In addition, on December 29, 2014, the Guam Public Utilities Commission approved the settlement between GPA and Pruvient Energy Guam Investment, Inc. (Pruvient) to terminate the Energy Conversion Agreement between the parties. The termination of this contract would allow for the de activation of the Tanguisson Power Plants and prevent GPA from violating the US Environmental Protection Agency's Electric Generating Utility (EGU) Mercury MACT Rule which carries a penalty of $37,500/day per generating unit. The contract was terminated on January 2, 2015 and the Tanguisson plants were taken offline. This resulted in a reduction of 53 MW of generating capacity. Lastly, on August 31, 2015, there was an incident at the Cabras 3&4 power plants that took down 78.6MW of generating capacity. As of April 30, 2016, the root cause of the incident has not been determined and the amount of insurance recoveries have also not been determined. In light of this incident and of the need to quickly restore generating capacity, on February 16, 2016, GPA entered into a Performance Management Contract to rehabilitate and operate four (4) combustion turbine (CT) units Yigo CT, Macheche CT and Dededo CTs #1 and #2. GPA believes the re commissioning of these units will provide better support to the Department of Defense installations in the northern part of the island during this critical recovery period. Although GPA's generating capacity at the end of the fiscal year was at a critical level, an Interuptible Load Pilot Program was authorized by the CCU and implemented with participating large customers to address this shortfall. During times of peak loads, the participants would go off the grid and run their own generators. In return, GPA would credit their accounts, at a generous rate, for the use of their generators. This action reduced the number and length of outages to other GPA customers. In addition, GPA procured and entered into a one year contract for 40MW of temporary power services which began services in early January 2016.

2 Fuel Supply - Fuel Oil Contracts Description of any material new contracts or material renewals or non-renewals of existing contracts for fuel oil On August 9, 2013, the Guam Power Authority (GPA) entered into a contract with Hyundai Corporation for the purchase of a minimum of 2,000,000 barrels per year of Residual Fuel Oil No. 6 (RFO) for a term of two (2) years with options to extend for three (3) additional one (1) year terms beginning September 1, On February 24, 2015, the Consolidated Commision on Utilities authorized GPA to petition the Guam Public Utilities Commission (PUC) to execute the 3 one year extension options in order to secure a stable premium for the price of RFO No. 6 fuel. The request was granted on March 26, 2015 and the extension of the contract was finalized on August 8, In December 2014, GPA entered into contracts with Mobil Oil Guam Inc. (Mobil) and Isla Petroleum and Energy Holdings, LLC (IP&E) to supply diesel fuel for all the generators in the system. IP&E will supply the units at the Tenjo Vista Power Plant and Mobil will supply all the other units. Both contracts are effective from January 1, 2015 through December 31, 2017 with options to extend the contract for two additional one year terms. Power Sales to the Military; Island Wide Power System - Customer Agreement Description of any renewal, cancellation or material changes in terms of the Issuer's Utility Services Contract with the U.S. Navy and the Department of Defense There were no changes made during the fiscal year to the Utilities Services Contract (USC) between the U.S. Navy and the Guam Power Authority and signed on July 30, 2012.

3 Table 1 Largest Customers Fiscal Year 2015 (Top Ten Customers) Customer Energy Sales (KWh) Energy Sales Revenues 1 Navy 317,393,055 $ 61,586,006 2 Guam Waterworks Authority 52,498,668 13,506,778 3 Department of Education 44,135,377 12,283,797 4 Guam International Airport Authority 22,415,526 5,180,602 5 Goodwin Development Corporation 15,555,304 3,527,424 6 Pacific Islands Club 15,456,662 3,234,983 7 Department of Public Works 12,987,446 6,521,339 8 Hyatt Regency Guam 12,678,630 2,641,644 9 Guam Hilton Hotel 11,610,999 2,555, University of Guam 10,594,140 2,808, ,325,807 $ 113,846,262 Average Monthly Total 42,943,817 9,487,188 % of Authority Total (Annual Basis) 33.47% 31.09% Insurance Table 2 The balance in the self-insurance fund The balance of the Self insurance fund at September 30, 2015 was $20,435, ,500, , ,435, Source: FY2015 Audited Financial Statements Balance Sheet (page 9), 2010A Table 3 Historical Customers, Energy Sales, Peak Demand and Revenues Fiscal Year Ending September 30: Restated Number of Customers (Average): Residential 41,255 41,612 41,708 41,993 42,590 Small Commercial 5,722 5,940 5,966 6,011 6,056 Large Commercial Auxiliary/ Standby/Other Public and Private Outdoor Lighting Navy Total Customers 47,971 48,520 48,598 48,918 49,530 Energy Requirements (MWh): Energy Sales Residential 487, , , , ,569 Small Commercial 367, , , , ,977 Large Commercial 389, , , , ,873 Auxiliary/ Standby/Other 4, Public and Private Outdoor Lighting 12,015 12,009 12,001 11,998 12,165 Total Civilian Energy Sales 1,276,143 1,219,764 1,218,259 1,209,095 1,222,194 Total Navy Energy Sales 358, , , , ,393 Total Energy Sales 1,637,662 1,562,795 1,565,109 1,533,323 1,539,587 System Losses 113, , ,038 86,468 79,267 Total IWPS Energy Requirements 1,750,937 1,731,086 1,668,147 1,619,791 1,618,854 Peak Demand (kw) 263, , , , ,000 Revenues ($000) Residential $ 112,320 $ 122,261 $ 125,932 $ 125,023 $ 105,533 Small Commercial 101, , , ,377 98,437 Large Commercial 98, , , ,089 93,776 Auxiliary/ Standby/Other 1, Public and Private Outdoor Lighting 6,561 7,177 7,469 7,400 6,676 Navy 71,893 86,033 84,899 75,323 61,586 Total Revenues $ 391,875 $ 438,112 $ 449,029 $ 434,463 $ 366,186

4 Table 4 Historical Costs of the Authority's Power Supply ($000) Fiscal Year Ending September 30: Restated Authority Operated Resources $ 243,711 $ 288,602 $ 295,466 $ 271,175 $ 204,136 Fuel Oil Costs $ 138,540 $ 177,628 $ 184,853 $ 159,581 $ 129,028 Other Production Expenses 20,840 24,991 22,009 19,305 20,079 Subtotal $ 159,380 $ 202,619 $ 206,862 $ 178,886 $ 149,107 IPP Operated Resources Fuel Oil Costs $ 105,171 $ 110,974 $ 110,613 $ 111,594 $ 75,108 Lease Payments- Energy Conversion Costs 19,705 19,937 20,264 20,632 18,404 Lease Payments- Debt Service 23,084 23,084 23,084 23,084 26,622 Subtotal $ 147,960 $ 153,995 $ 153,961 $ 155,310 $ 120,134 Total Cost of Power $ 307,340 $ 356,613 $ 360,823 $ 334,196 $ 269,241 Authority Energy Sales (GWh) 1,618 1,563 1,565 1,533 1,540 Average Unit Cost Per kwh of Energy Sold (cents/ kwh) Total Cost of Power Less IPP Debt Service $ 284,256 $ 333,529 $ 337,739 $ 311,112 $ 242,619 Outstanding Indebtedness An update to the balances of the Issuer's outstanding indebtedness Series Senior Revenue Bonds $ 76,470, Series Senior Revenue Bonds 340,055, Series Senior Revenue Bonds 150,440, Series Subordinate Revenue Bonds 14,155, ,120,000 Add premium on 2014 and 2012 bonds 34,543,120 Less discount on bonds (3,612,954) Total bonds $ 612,050,166 Obligations under capital leases 54,429,782 Total indebtedness $ 666,479,948 Working Capital and Liquidity The balance in the Working Capital Fund xx 76,470,000 76,470, ,055, ,510, ,440, ,440,000 14,155,000 27,300, ,120, ,720,000 34,543,120 37,137,418 (3,612,954) (3,713,958) 612,050, ,143,460 39,609,006 54,429,945 14,820,776 18,774,245 54,429,782 73,204, ,479, ,347,650 The Working Capital Fund balance at September 30,2015 was $31,056,786. Cash, Cash Equivalents $26,204,225 Investments 4,855,561 $31,056,786 Fuel Supply Hedges An update to the mark-to-market value of any fuel oil hedges of the Issuer This should be $32,862,800, the rest of the W 26,201,225 4,855,561 31,056,786 32,862,800 (1,806,014) There were no outstanding fuel hedge contracts as of September 30, 2015.

5 , 2010A Table 5 Operating Results and Debt Service Coverage (Cash Basis) ($000) Series 2012A, 2010A Restated Fiscal Year Ending September 30: Operating Revenues Energy Sales Revenues $391,875 $438,111 $449,029 $434,462 $366,185 Additional Future Requirements 0 Other Electric Revenues 2,606 1,916 2,927 2,156 4,775 Total Operating Revenues $394,481 $440,027 $451,956 $436,618 $370,960 Operating Expenses Power Supply Costs $284,256 $333,530 $337,746 $311,112 $242,619 Transmission and Distribution Expenses 12,241 12,717 13,368 12,950 11,170 Customer Accounting 4,454 5,031 5,101 3,999 4,739 Administrative and General 30,432 31,378 31,590 28,393 21,908 Total Operating Expenses $331,383 $382,656 $387,805 $356,454 $280,436 Amounts Available for Debt Service Net Operating Revenues $63,098 $57,371 $64,151 $80,164 $90,524 Interest/ Other Income (Expense) 5,925 1, Balance Available for Debt Service $69,023 $58,484 $64,871 $80,321 $90,780 Senior Lien Debt Service Existing Senior Debt Service $27,484 $27,483 $19,306 $25,454 $25,096 Total Senior Lien Debt Service $27,484 $27,483 $19,306 $25,454 $25,096 Senior Lien Coverage Pursuant to the Senior Indenture IPP Operated Resources-Lease Payments Capital $23,084 $23,084 $23,084 $23,084 $26,662 Balance Available for Debt Service $45,939 $35,400 $41,787 $57,237 $64,118 Coverage of Senior Lien Debt by Balance Available for Debt Service after paying IPP Capital Amount Available After Senior Lien Debt and IPP Capital $18,455 $7,917 $22,481 $31,783 $39,022 Subordinate Lien Debt Service $15,934 $15,163 $15,193 $15,217 Existing Subordinate Debt Service $7,242 $15,934 $15,163 $15,193 $15,217 Subordinate Lien Coverage Pursuant to the Subordinate Indenture Subordinate Lien Coverage after paying IPP Capital Total Debt Service Coverage after paying IPP Capital Interest Income $728 $1,364 $1,209 $974 $592 Amount Available for Capital Improvements $19,184 ($6,653) $8,527 $17,564 $24,397 Capital Improvement Program: Amount Funded from Current Revenues $11,986 $18,587 $17,128 $20,597 $4,563 Amount Funded from Bond or Loan Proceeds 1,843 20,542 23,502 40,764 24,460 Amount Funded from Grants 1,319 7,208 11,142 1,813 3,091 Amount Funded from Self insurance 0 0 4, Total Capital Improvements $15,148 $46,337 $56,399 $63,174 $32,114 Remaining Balance Available $7,198 ($25,240) ($8,601) ($3,033) $19,834 Energy Sales (MWh) 1,637,662 1,562,795 1,565,109 1,533,323 1,539,587 Cost of Power per kwh of Energy Sold (cents/ kwh) Unit Revenue from Energy Sales per kwh (cents/ kwh) Increase in Unit Revenue from Energy Sales Over Previous Year (percent) 7.7% 16.9% 2.6% -1.4% -15.4%

6 , 2010A Any adjustment in rates of the Issuer, the customer class to which the rate adjustment pertains and the effective date of the rate adjustment Series 2012A, 2010A Customer Class Effective Date % Inc/(Dec) (1) 1 Residential 10/1/ % 2 Commercial 10/1/ % 3 Government 10/1/ % 4 Navy 10/1/ % Note (1) Effective October 1, 2014, the start of GPA's fiscal year, there were revenue neutral rate adjustments implemented between the Lifeline Block and Tail block Energy Charges in the Residential rate schedule and the first and second block for Energy Charges of the Commercial and Government rate schedules as well as the demand rates for those customers who are billed for demand. For the Residential rate schedule, the adjustment between the two blocks was part of the five year phase in of adjustments that would ultimately result in the Lifeline Block energy rate being equal to 80% of the Tail Block energy rate. The last adustment for this phase in will take effect on October 1, In May 2012, GPA introduced its new rate structure for Commercial and Government customers whose billings were based on tiers of kwh per kw of billing demand. Under the new rate structure, demand and energy charges were now billed separately. This new rate structure did not please some customers. After assessing the situation, GPA petitioned and received approval from the Guam Public Utilities Commission on September 2013 to modify the rates for these commercial and governmental customers in the interim and, ultimately, a phased implementation of the demand rates would be applied over the next three fiscal years. These "Parity Adjustments" in FY2014, FY2015 and FY2016 should not affect the overall revenue requirements for GPA. They do, however, impact the portion of the overall revenue paid by each customer class. Note (2) On April 2, 2012 a Working Capital Fund Surcharge became effective at a rate of $.00466/kWh for Civilian and $110, 374/month for the Navy to cover a portion of the 2010 Subordinate bond debt service. This surcharge was discontinued for meters read after September 30, The related debt service was paid off on October 1, Note(3) On July 31, 2015, the Self Insurance Fund balance reached the cap set by the PUC of $20M. As a result, the Self Insurance Fund Surcharge was suspended for all meters read after July 31, Once the fund falls below $18M, the surcharge will be reactivated. As of April 30, 2016, the surcharge had not been reactivated.

GUAM POWER AUTHORITY (A COMPONENT UNIT OF THE GOVERNMENT OF GUAM) FINANCIAL STATEMENTS, ADDITIONAL INFORMATION AND INDEPENDENT AUDITORS' REPORT

GUAM POWER AUTHORITY (A COMPONENT UNIT OF THE GOVERNMENT OF GUAM) FINANCIAL STATEMENTS, ADDITIONAL INFORMATION AND INDEPENDENT AUDITORS' REPORT (A COMPONENT UNIT OF THE GOVERNMENT OF GUAM) FINANCIAL STATEMENTS, ADDITIONAL INFORMATION AND INDEPENDENT AUDITORS' REPORT YEARS ENDED SEPTEMBER 30, 2015 AND 2014 (AS RESTATED) Deloitte & Touche LLP 361