According to a recent report by the Iloilo-based Institute of Contemporary Economics (ICE), inadequate investment in power distribution by electric cooperatives (ECs) is endangering the Panay and Guimaras power grid.
Out of the P10.52 billion allocated for capital projects, the seven ECs supplying Panay and Guimaras have spent only P2.38 billion from 2022 to September 2024, utilizing just 22.6% of the planned funds.
Serving over 785,000 customers, these ECs dedicate only 3.1% to 3.7% of their budget to infrastructure, barely covering maintenance. This chronic underinvestment leaves the grid stagnant as demand and technology progress.
The ICE report noted that inadequate investment by Panay and Guimaras cooperatives raises doubts about their capacity to handle evolving power distribution challenges, such as severe climate conditions and service infrastructure upgrades.
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Panay’s energy challenges
If this situation continues, consumers and businesses will suffer from unreliable power, with recurring blackouts and rising costs. Inefficient distribution not only leads to higher electricity bills for households but also hampers economic development by discouraging local business growth.
From January 2 to 5, 2024, Panay and parts of Guimaras faced widespread blackouts due to major coal plant failures. Local officials and business groups urged an investigation, holding the National Grid Corporation of the Philippines (NGCP), the Department of Energy (DOE), and the Energy Regulatory Commission (ERC) accountable. At a Senate hearing on January 10, Iloilo City Mayor Jerry Treñas estimated P2 billion in economic losses.
Despite NGCP’s assurances, parts of Panay and Negros faced more outages in March 2024 due to the unexpected shutdown of three Panay Energy Development Corporation units, totaling 316 megawatts. This triggered additional plant failures, further disrupting the power supply.
With renewable energy on the rise, the power sector faces growing pressure to modernize. The shift toward cleaner energy and decentralized power sources requires a proactive strategy.
However, Panay and Guimaras’ outdated distribution system seems unprepared for these evolving demands.
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The broader picture of ECs
ECs, which comprise 122 of the Philippines’ 152 power distributors, serve 11.4 million customers but often struggle with funding and technical capacity. This issue in Panay and Guimaras highlights a nationwide challenge, as many cooperatives lack the resources to upgrade their systems for growing demands.
A recent Supreme Court ruling dismissed the Iloilo Electric Cooperatives’ (ILECOs) challenge to Republic Act 11918, which expanded MORE Electric and Power Corporation’s franchise into their service areas. The decision affirmed that ECs have no constitutional right to exclusive operations.
The Supreme Court ruled that the Constitution prohibits exclusive franchises, stating that a franchise is a state-granted privilege, not private property. It emphasized that competition prevents ILECOs from controlling electricity prices and benefits consumers by allowing new providers before their franchises expire.
The ICE report notes that while ECs remain vital in remote areas, their model may no longer fit developed regions needing advanced power systems. Cooperatives have been crucial in rural electrification, but modern distribution requires financial stability, technology, and scale—challenges many cannot meet independently.
Industry experts suggest that strategic partnerships could enhance financial stability, technological advancement, and service quality, enabling ECs to better meet the needs of growing communities.
“It would be advisable for these cooperatives to consider bringing in partners with the financial wherewithal, technological expertise, and customer experience know-how,” the ICE report asserted. “Given the current environment we are in, the status quo will not be enough to elevate the state of our electricity distribution infrastructure and ultimately, provide the benefits to the people that are contemplated by RA 11918 and the Supreme Court.”
Sources:
https://dailyguardian.com.ph/panay-power-grid-at-risk-due-to-underinvestment-by-electric-coopsys
https://icsc.ngo/icsc-panay-blackouts-signal-urgent-need-to-reevaluate-the-islands-energy-system
https://www.philstar.com/nation/2024/03/03/2337613/power-outages-hit-panay-negros-anew
https://www.pna.gov.ph/index.php/articles/1230320
https://dailyguardian.com.ph/power-sector-must-adapt-to-new-challenges