Palawan is facing an imminent and serious power crisis, even if one discounts the fact that the rotational blackouts being felt throughout the mainland grid over these past few weeks are already a clear indication of it.

The Palawan Electric Cooperative (PALECO), which distributes power produced by at least three independent power generation companies, namely DMCI Power Inc, PPGI, and Delta P, currently has its hands full trying to cope with the demands of its members-consumers-owners (MCO) throughout the province with barely enough electricity supply generated by its suppliers.

PALECO has acknowledged that the demand for power has increased to a point where it is already beyond the combined capacity of the independent power producers (IPPs), assuming the best scenario of them operating at their optimum capacity without unexpected shutdowns or mechanical troubles.

PALECO’s general manager, Engr. Rez Contrivida, explained in an interview with Palawan News that their maximum capacity of producing and distributing 65 MW of electricity supply is already at the same level as the actual demand.

“Naglalabas na kasi kami ng scheduled load shedding dahil nga yong supply natin is almost equal the demand (We are now implementing scheduled load shedding because our supply is almost equal to the demand),” Contrivida said. He added that there has been an increase in power consumption, triggered in part by the intense hot weather currently being experienced in Palawan.

In addition, the power generating plants have had to shut down during scheduled periods for maintenance purposes. Because there is no additional power to serve as a buffer, PALECO has been forced to implement rotational brownouts.

“Kung ayos naman lahat yan, okay naman sana (If everything is fine, it would have been okay),” Contrivida said. Unfortunately, the situation of power supply and demand is not as ideal as it used to be, at least in the past few years.

Subsidy payments
Complicating the already tenuous power supply situation in Palawan is the financial squeeze being experienced by its independent power producers due to unpaid subsidies from the National Power Corporation (NAPOCOR).

Under the present system for off-grid areas like Palawan and other island provinces, consumers are insulated from the high cost of power generation through a subsidy scheme dubbed “missionary electrification” or “Universal Charge on Missionary Electrification” (UCME). The subsidy is shouldered by all consumers nationally and collected by the NAPOCOR, which has the obligation to pay the power producers.

The UCME institutionalized the supply of subsidies in regions that were not interconnected to the major grids in order to bring the rate of growth and advancement in these areas up to the same level as the main grids.

The outbreak of the war in Ukraine and the global rise in the cost of fuel, however, have strained NAPOCOR’s financial capability to pay the power producers in Small Power Utilities Group (SPUG) areas such as Palawan their UCME subsidies.

Palawan News learned that the province’s biggest power producer, DMCI Power Inc., has unpaid collectibles from NAPOCOR to the tune of P1.1 billion. The bulk of this amount is from its Palawan operations, amounting to P653 million (from the period September 26, 2022, to December 25, 2022).

Among all the other IPPs in the province, DMCI currently provides the largest dependable capacity of 35 MW to the island’s main grid.

PALECO officials told Palawan News that DMCI is already having difficulties maintaining its credit line with its own fuel suppliers to run their power plants and had sought help from 2nd District Palawan Rep. Jose Alvarez to prompt NAPOCOR to settle its outstanding obligations to the company.

Contrivida said they have already formally asked the NAPOCOR to inform them about their outstanding financial obligations to the IPPs to help them with their own planning.

“Nag-request na nga ako sa NPC ng mga naibayad niya na kay IPPs. Pero yong binanggit ng mga IPPs natin na hindi pa sila nababayaran, gusto rin natin i-validate (I have already requested from NPC the payments they have made to the IPPs. However, we also want to validate the claims of our IPPs that they have not yet been paid),” he said.

IPPs supposed to notify PALECO
Contrivida explained that their power suppliers have an obligation to inform them if they are not able to comply with their contractual obligation to produce power according to their power supply agreements. He said they have yet to be informed by DMCI or any of their power suppliers whether they can no longer operate because of their financial situation.

Despite the commitment, he noted that the DMCI had an unscheduled shut-down of its Irawan site on the night of April 25 and had informed PALECO one hour before the move. The particular plant was supposed to produce 20 MW of power.

Contrivida said the company told them there was a late delivery of fuel by their supplier due to an unpaid subsidy from NPC.

“Nagulat kami na low fuel sila that time. Noong tinatanong ko ay na-late ang delivery ng supplier nila ng fuel kasi naputol ang kanilang credit line dahil hindi sila nabayaran ni NAPOCOR (We were surprised that they had low fuel at that time. When I asked, they said that their fuel supplier’s delivery was delayed because their credit line was cut off due to non-payment by NAPOCOR),” he said.

Despite the fact that operations at the Irawan site were immediately resumed, PALECO ensured daily monitoring of fuel levels at power plants.

NAPOCOR’s commitment
PALECO noted that it is counting on NAPOCOR’s commitment to continue paying the remaining unsettled UCME to IPPs. Contrivida further stated that the Energy Regulatory Commission (ERC) has approved an increase in UCME to P0.15/kwh, which will benefit off-grid areas such as Palawan.

“Meron naman sila commitment na magbayad dahil nasolusyonan na yong first quarter problem na pagbabayad sa mga IPP. We are expecting na tuloy-tuloy; we are looking for other solutions para tuloy-tuloy ang bayad nila ng subsidy sa mga off-grid (They have a commitment to pay because the first-quarter problem of paying the IPPs has been resolved. We are expecting that it will be continuous; we are looking for other solutions for the continuous payment of subsidies to off-grid areas),” he said.

Contrivida added he is also looking forward to the approval of a P5 billion loan of NAPOCOR from the Land Bank of the Philippines, which would help with the staggered payment of all power providers.

Palawan won’t end up like Occidental Mindoro
The province of Occidental Mindoro experienced weeks of 20-hour power interruptions due to unpaid UCME to power providers.

However, the PALECO management is confident that Palawan will not have the same fate as Occidental Mindoro and assures that all power plants are operational.

“Sa Palawan, hindi naman natin hahayaan na ganon ang mangyari—dito sa atin, tumatakbo pa naman—continuous coordination ang PALECO at IPPs para malaman namin kung ano ang real situation para makapaghanda (We will not allow that to happen here in Palawan. Our power supply is still running and we have continuous coordination with the IPPs to know the real situation so we can prepare),” he said.