The congressional probe on the power situation in Palawan began Thursday with key House leaders cautioning provincial and city officials against their push to allow a private distribution company to take over the Palawan Electric Cooperative (PALECO) as power distributor.
The House energy committee, chaired by Pampanga’s 2nd District Rep. Mikey Arroyo, held an initial hearing on live streaming that lasted six hours, with energy sector representatives and Palawan officials weighing in on the problem of persistent blackouts in the province.
Local officials who spoke at the hearing laid the blame squarely on PALECO, with Governor Jose Alvarez claiming that the cooperative has no capability to provide sufficient power that will propel growth in the province.
Governor Alvarez urged PALECO to enter into a joint venture with a private company to address both the power supply gap in the province as well as the distribution problems of PALECO that cause blackouts.
City Councilor Robert Elgin Damasco blasted PALECO for its poor distribution service in its franchise area “for the last 40 years” and pushed a resolution recently passed by the City Council opening Puerto Princesa to a new distribution franchise that will compete with PALECO.
Privatization is not a solution
Rep. Presley de Jesus, House energy committee vice-chair, warned that a private company takeover of PALECO will only lead to higher electricity rates, pointing out that the company’s recovery costs will be passed on to consumers.
“If private (company) will (replace) PALECO, sa Palawan ay madadagdagan din ang rate niyo. Why? Ipa-pass on lahat ‘yan, everything is passed on. The solution is not allowing a private (entity). Make sure to cooperate with Paleco,” he said.
He also pointed out that PALECO is a private entity and not a for-profit company.
“You cannot privatize already a private one. There’s still more time to help them, tutulungan namin kayo,” he said in response to Councilor Damasco.
For his part, Governor Alvarez proposed that PALECO merge with a private entity where it can retain a minority 30 percent stake. He cited the experience of Iloilo which he claims is enjoying a much lower electricity rate because of its privatized power distribution.
Alvarez had been pushing to grant a franchise specifically to MORE Power Corporation, which currently holds a privatized franchise in Iloilo province, to enter Palawan.
“Nakakainggit kasi sa Iloilo ay P6.30 na lang ang power, compared sa Palawan na P9.25, P9.45, meron pa subsidy ang gobyerno galing sa UCMA na more than two pesos,” Alvarez said.
“Ang franchise ng PALECO ay from NEA. I don’t know which is more superior, franchise of Congress or franchise of NEA. So, my solution ay kausapin ang PALECO to accept somebody, bigger and financial capacity to expand the service all throughout the island. Hindi kasama sa norte, yong Coron, iba ang franchise holder dito,” Alvarez added.
De Jesus, however, said Governor Alvarez’ claim about the Iloilo pricing was “misleading”.
“The good governor mentioned that in Iloilo, the MORE Power is charging six pesos now on generation. You know what, that’s misleading. Why? One-month lang ‘yan,” he said.
“The rate methodology of the private DUs vis-á-vis to electric cooperatives is different. Why? Because in private DUs, they are allowed by ERC ‘yong tinatawag natin na 12 percent na patong nila because they have to make money syempre negosyante sila. There’s no problem with that. Pero as electric cooperatives are concerned, wala silang kita. Why? Because you are the owner of the electric cooperatives,” he added.
Power supply gap
Governor Alvarez asserted that the power supply in the province which is generated by three independent power producers remains inadequate. This, despite the Department of Energy pointing out that PALECO is already “over-contracted” on its existing supply agreements with power providers.
“Panahon na talaga para pagbigyan ng PALECO to open up their minds. Huwag ‘yong saradong-sarado sila for the progress dahil ma-impede ang progress ng buong Palawan. Nakikiusap kami na buksan nila ang kanilang kaisipan na tumanggap ng bagong additional capital kung kanino man manggaling ang importante, expand their service. The power should always precede demand,” he said.
Engr. Ferdinand Pontillas, PALECO corporate planning manager, denied this, however, stating that PALECO’s dispatchable capacity currently already exceeds the peak demand.
He said they have 60.2 megawatts contracted from three power producers, while the current projected demand is 54.4 megawatts, with a net margin of 55.8 megawatts
Rep. de Jesus, a party-list congressman representing the Philippine Rural Electric Cooperatives Association, Inc. (Philreca), argued that the solution to the province’s power problem is cooperation among the main power players. He added that the Capital Expenditure (CapEx) program of PALECO which had been approved by the Energy Regulatory Commission in December 2018 should be able to address its distribution problems.
Among those funded by the CapEx is PALECO’s P40 million Supervisory Control and Data Acquisition (SCADA) that will help analyze and gather real-time data to speed up electricity resumption during outages.
MORE Reedbank Corp
PALECO board of directors had submitted a position letter in 2019 to the Lower House opposing the granting of a franchise to MORE Reedbank Corp to establish and operate a power distribution system in the province. The position letter was in response to a House bill filed by the Reps. Frederick F. Abueg and Gil A. Acosta Sr.
The corporation is a subsidiary of Enrique Razon Jr.’s Prime Metroline Holdings, Inc (PMHI).
Meanwhile, House leaders admonished Councilor Damasco for what they claimed were attempts to “politicize” the approval of PALECO’s CapEx by the Department of Energy (DOE). This, after Damasco testified under oath that the release of the CapEx occurred after he asked Senator Bong Go to intercede on PALECO’s behalf.
On questioning by House representatives, the DoE stated that they did not receive any request from Senator Bong Go to expedite the approval of PALECO’s CapEx.
The house committee is set to hold continuing hearings on the matter.