Gov’t removing poor’s power subsidy

PUERTO PRINCESA CITY—The government would start implementing in Palawan a policy shift that would remove the subsidy that lowers power rates in so-called missionary areas, or places that are off grid or are too remote.

Officials and residents of Palawan had been advised by the National Power Corp. (Napocor) to brace for higher power rates as the power subsidy that the province currently enjoys would be gone next year.

Gladys Cruz-Sta. Rita, Napocor president, said the Energy Regulatory Commission (ERC), the government agency that regulates power pricing, had mandated the Napocor to start removing the subsidy to Palawan.

As in most island provinces not connected to mainland grids like Luzon, Palawan consumers pay only about half the actual cost of power generation in an island setting, with the rest of consumers elsewhere paying for the balance dubbed as universal charge for missionary electrification (UCME).

Two reasons had been cited for removing the subsidy—the Napocor’s financial difficulties and complaints from consumers in so-called main grids.

The looming rate increase, even if collected in installments, is sending jitters to local businesses already burdened by uncompetitive rates and unreliability of power supply. The provincial government expects power rates to increase initially by P2 per kilowatt-hour starting next year.

Bart Duff, head of the Palawan Chamber of Commerce, said the subsidy removal could translate to an increase in power rates of up to P16 per kwh. In other remote areas in the province not connected to the main Palawan grid, power rates could go as high as P18 per kwh.

“We are facing a scenario where even our vaunted tourism sector can become uncompetitive because of the increased cost of doing business,” a budget inn owner told the Inquirer.

Palawan Gov. Jose Alvarez urged businesses, during a dialogue, to start factoring in the higher cost of electricity in their plans, admitting that power rates starting next year “can

increase by P2, which we will feel only at P1.”

Last week, a planning body formed by the provincial government to frame a long term energy master plan unveiled a P41-billion investment plan to energize the entire province and develop new sources of power, mainly from renewable energy sources, such as biomass.

For a province with an annual internal revenue of less than P2 billion, the plan is a pipe dream. The province, however, has begun exploring an agreement with the national government to use Malampaya funds to bankroll its energy master plan.

Budget Secretary Florencio Abad told the Inquirer last week that his department had been approached by provincial government officials to explore a compromise agreement with the current administration on an estimated P70 billion in royalty shares from the Malampaya project being disputed by Palawan and the national government.