The leadership of the Palawan Electric Cooperative (PALECO) came under fire from the House energy committee on Monday during its hearing on the power situation in Palawan, blaming its management for the power-related problems besetting the province.
The hearing concluded without any consensus, aside from two House resolutions presented by 2nd Palawan District Representative Jose Alvarez. These proposals advocate for the National Electrification Administration (NEA), Department of Energy (DOE), and Energy Regulatory Commission (ERC) to collaborate on creating a Transition Purchase Agreement (TPA) instead of an Emergency Power Supply Agreement (EPSA) and expediting the Competitive Selection Process (CSP) for PALECO’s additional 42-megawatt energy supply target.
PALECO had previously asked the Palawan legislators to help convince the ERC and DOE to reinstate the missionary subsidy that was removed following the Supreme Court’s decision in Alyansa Para sa Bagong Pilipinas, Inc. case in 2019 that would have made power rates in Puerto Princesa City and several municipalities in Palawan connected to the mainland grid affordable once again.
Even the suggestion put forward by Dr. Antonio Cabrestante, one of the convenors of the Palawan Electric Member Consumer Owner (PEMCO) coalition, regarding a takeover by the NEA, did not receive thorough discussion or questions from any members of the energy committee.
The hearing was prompted by House Resolution No. 1544, filed jointly by Speaker Ferdinand Martin Romualdez as caretaker for the 3rd District, Rep. Alvarez, and Rep. Edgardo Salvame of the 1st District, citing an urgency to address the rising cost of electricity in the province and supply and distribution problems.
At the beginning of the probe loop, Alvarez read Speaker Romualdez’s statement, wherein he clarified that the objective is to find solutions to the electricity problems affecting Palawan.
Romualdez highlighted their responsibility in supervising issues related to power distribution, supply, and generation. He said the inquiry is to assure constituents in Palawan that the goal is to provide the most immediate and viable solution to provide reasonable energy rates, sufficient power distribution, and sustainable sources of energy for Palaweños.
He stated further that, according to the National Electrification Administration’s (NEA) most recent quarterly assessment for the second quarter of 2023, PALECO exhibited the lowest collection efficiency, as well as the highest system average interruption frequency and systems average interruption duration in Region 4B.
“Sa suma total sa buong rehiyon ng Mimaropa, ang PALECO ay ang may pinaka matagal at madalas na power interruption na umaabala sa araw-araw na pamumuhay ng mga Palaweño at humahadlang sa maayos na daloy at pag-unlad ng maliit man o malaking mga negosyo sa probinsya,” Alvarez read from the Romualdez’ statement.
Regarding the Emergency Power Supply Agreement (EPSA) with Delta P, Inc., Romualdez said that it played a role in the substantial rise in power tariffs in Puerto Princesa City, Aborlan, Narra, Brooke’s Point, Bataraza, Sofronio Española, Quezon, Roxas, and the Dumaran mainland.
Alvarez, on his part, expressed his full awareness of the issues faced by PALECO in Palawan, which accounts for approximately 5.6% of the country’s total land area of 31 million hectares.
“Sa unahan ng Coron, meron sila[ng] tinatawag doon na BISELCO, na merong ka-joint venture na pribado. Magmula noong Yolanda, which was more than 10 years ago, wala po[ng] masyado[ng] reklamo sa kuryente doon sa Coron. Bakit? Maganda ang ugnayan ng private investor at saka yung kooperatiba doon,” Alvarez said.
Alvarez provided a thorough account, explaining that when he took on the position of Palawan governor in 2013, various entities like MERALCO, the Garcias from Cebu, and MORE Power Inc., who already had a power contract in Iloilo province, showed keen interest in making investments in Palawan.
“I introduced them to PALECO, hoping that magkakaroon sila ng ugnayan either in investments or whatever form to improve the power situation in Palawan. Sad to say, wala pong nangyari,” he said.
Furthermore, he added that the situation in the province has been worsened by the lack of alignment in PALECO’s implementation of the competitive selection process (CSP) for power providers, which is the recognized method for procuring supply.
He asked for the hearing to remain “open-ended” until a resolution is found to address Palawan’s electricity problems.
Issues against PALECO
Cabrestante, who was invited as a resource person and is known for his strong criticism of PALECO, advocated for the government to assume control of the cooperative because of the cooperative’s alleged inefficiencies. He pointed out that for the longest time, members, consumers, and owners of PALECO have endured incessant brownouts, a lack of transparency and accountability, negative economic impacts, adverse effects on their quality of life, and exorbitant energy prices.
“Our proposed resolution, replacement of PALECO by the national government. It is the only viable solution to ensure reliable and affordable electricity for Palawan and Puerto Princesa City,” Cabrestante stated.
“PALECO’s persistent failure to provide reliable electricity has caused unacceptable hardship for the people of Palawan and Puerto Princesa City. Nagdurusa po ang buong Palawan at lungsod ng Puerto Princesa dahil sa mismanagement at kapabayaan ng PALECO,” he told the hearing.
PALECO General Manager Rez Contrivida, for his part, sought to deflect the criticisms on the cooperative, explaining that factors not within its control are the main causes of the current problems they are facing.
“We are part of the National Power Corporation-Small Power Utilities Group (NPC-SPUG) area. Serving a community that relies heavily on electricity for their daily lives. Nakikiusap po ako sa inyong lahat, especially to the honorable members of Congress, to help us address a pressing issue that affects every household and business in Palawan,” Contrivida said.
In November 2023, Contrivida said that PALECO had to impose a sudden and significant increase in power rates.
“This was not a decision we made lightly, but a consequence of the Energy Regulatory Commission’s order to stop the implementation of the Power Supply Agreement (PSA) between PALECO and power provider Delta P. To avoid massive and extended rotational blackouts and to ensure continuous power supply for our consumers, PALECO entered into an emergency power supply agreement with Delta P,” he said, adding that the agreement was signed and executed in accordance with the DOE Circular No. DC202306-0021 or the DOE 2023 CSP Circular.
He said the DOE circular specified that the negotiated procurement of EPSA should be filed within 30 days after signing. They followed this directive to address the immediate need for power and to prevent any further disruption of their services to consumers.
Contrivida stressed that electric cooperatives like PALECO operating in the SPUG area but not yet connected to the country’s transmission system are entitled to a subsidy under EPIRA, regardless of the form of PSA they enter into.
“It is evident that the cause of power in Palawan would have been lower than the current power rate if the subsidy entitled to PALECO member-consumer-owners were given. A subsidy is crucial to ensuring affordable electricity for our community, and without it, the burdens fall heavily on the shoulders of our members, consumers, and owners,” he stated.
“We understand the complexities and challenges that come with ensuring a reliable and affordable power supply and we believe, with your support, we can find solutions to ease the burden of our people. We seek your assistance in exploring avenues to reinstate the subsidy,” he added.
Alyansa case
DOE Assistant Secretary Mario Marasigan detailed that his agency had issued the circular regarding the CSP in 2018.
“During that time, we are finding it difficult to have all the distribution utilities, both the private ones and the electric cooperatives, in conducting CSP,” Marasigan said.
He said that in one of the amendments to the Department Circular about the CSP for the procurement of their supplies “for captive markets, the inclusion of some sort of penalty for the electric cooperatives and the distribution utilities that do not conduct CSP on time. That came in in 2020. So, it’s not new.”
Marasigan clarified that the Supreme Court decision concerning the Alyansa case was rendered and promulgated in May 2019. Upon promptly receiving a copy of the decision from the DOE that same year, the Department issued an order to all distribution utilities, including electric cooperatives, instructing them to seek emergency power supply agreements while conducting the competitive selection process.
The power supply agreements affected by the SC decision were explicitly identified. Subsequently, the ERC officially confirmed the list of effective power supply agreements, which include that of PALECO.
“In fairness to PALECO, in their submissions of Distribution Development Plan, they have already identified that they will have an expiring PSA in 2024. So they conducted as early as 2018 a CSP to replace the PSA that will be terminated. Unfortunately, PALECO was not able to complete that CSP. Among those reasons that they have identified was the COVID-19 pandemic and also Typhoon Odette,” Marasigan emphasized.
Marasigan added that, as far as the DOE was concerned, they convened a meeting with PALECO, the NEA, and the National Power Corporation (NPC) to discuss and deliberate on the terms of reference and invitation to bidders.
Unfortunately, he said, even if PALECO pursued its CSP for 20 MW, it did not incorporate the DOE’s comments.
He added that while PALECO was able to conclude the result of the CSP, it was contested by at least two bidders—DMCI and SIPCOR. SIPCOR filed directly for arbitration, which took another year to resolve.
“What we also noticed in the terms of reference, it has no definite commissioning date or the committed date of delivery. While they have identified that it should be replaced the PSA for the expiring PSA, what is indicated in the terms of reference is one year after the issuance of the ERC of a provisional authority,” Marasigan said.
