Higher power rates loom in Mindanao

CAGAYAN DE ORO CITY (MindaNews/07 March) – Consumers in Mindanao may have to brace for higher electricity rates this summer, industry executives told members of the House of Representatives Thursday.

The executives told House members led by Rep. Reynaldo Umali (2nd District, Oriental Mindoro), chair of the committee on energy, that electricity rates could reach P32 per kilowatt hour (kwh) if the power situation continues to worsen this summer.

Rolando Linaac, operations chief of the Iligan Light and Power Company, said the Power Sector Assets and Liabilities Management Corporation (PSALM) has already resorted to load shedding and power curtailment after one of the Agus hydro plants and the STEAG coal-fired power plant in Villanueva town, Misamis Oriental crashed during the Feb. 27 blackout in Mindanao.

Linaac said many of Mindanao’s power distributors including electric cooperatives will likely resort to buying the more expensive electricity offered by the Interim Mindanao Electricity Market (IMEM).

PSALM which operates the Agus hydro plants in Lanao, on the other hand, sells electricity at P3 per kwh.

“The rate will depend on the generation mix. If the electricity from PSALM will amount only to 60 percent, then many of us will have to resort to buying the electricity offered by IMEM,” Linaac said.

He said the dependence on IMEM by Mindanao’s distributors will go higher throughout the summer months when production of the Agus hydro plants go down as Lake Lanao dries up.

The National Grid Corporation of the Philippines (NGCP) in its website said the power outlook in Mindanao as of Thursday morning, had 1,064 megawatts (MW) production from its hydro plants and coal plants against the peak system requirement of 1,222 MW.

The NGCP reported Mindanao had a power deficiency of 122 MW the situation following the shutdown of STEAG coal plant.

STEAG coal plant, which generates 210 megawatts of electricity, will undergo repair works from two to three months, according to company spokesperson Jerome Soldevilla.

Linaac said power consumers will shell out P3 more per kwh to add to the current P4 kwh generation charge if the Iligan utility will resort to buying from IMEM.

The IMEM, like its counterpart in Luzon, the Wholesale Electricity Spot Market or WESM, was formed following the restructuring of the Electric Power Industry Reform Act of 2001.

The IMEM was operationalized by the NGCP and the Department of Energy in Mindanao last year, to serve as a spot market for electricity to allow private power producers to sell their services.

As an electricity trading platform, the IMEM is expected to help improve power supply in Mindanao, which has been hit by persistent brownouts for the past years.

NGCP, a private corporation owned by Henry Sy Jr., of the SM Group, the Coyuitos and State Grid of China, operates the transmission lines in Mindanao and the rest of the country.

“The IMEM is susceptible to price manipulation because most of its trading is unregulated,” said Bayan Muna Rep. Carlos Isagani Zarate.

Zarate cited the price hike sought by Manila Electric Co. following the maintenance shutdown of Malampaya Natural Gas Facility, which resulted to hikes in electricity rates.

“Now the same scenario is happening in Mindanao. The February 27 shutdown of Agus and STEAG is prelude to another spike in electricity rates,” Zarate said.

The inevitable hike of electricity rates this summer is expected to greatly affect not only the consumers in Iligan but most residential houses and small businesses in other parts of Mindanao

Sergio Dagooc, president of the Association of Mindanao Rural Electric Cooperatives said 60 percent of Mindanao’s 23 million consumers are small, poor families living in houses with only one electric light and no appliances.

Dagooc said he estimated that with a power mix of 60-40 percent of PSALM generated electricity and power from IMEM, the poor families will shell out P3 per kwh on top of their monthly electricity bills

He said a family in Mindanao uses an average of 15 kilowatts per month and have a monthly bill of P60.

“That means the family with pay an additional P45 on top of their P60 monthly bill. That is P105 a month,” he said. (Froilan Gallardo/MindaNews)