Despite its previous history of stable lowered electricity rates, a surge in electricity rates looms over Iloilo City, straining its residents and businesses. The forecast is grim for the region’s economic stability with the threat of rising power generation costs.
The Institute of Contemporary Economics (ICE) reported an upward trend in Iloilo’s electricity prices from August 2023 to July 2024. Power rates play a crucial role in the region’s cost of living, potentially knocking down Iloilo’s efforts to mitigate inflation.
The Data
The ICE analytics show varied electricity rates among energy providers. MORE Power, the primary utility in the region, offers the lowest rates at 12.86 P/kWh as of July 2024. The Iloilo Electric Cooperatives (ILECOs) are more expensive, with ILECO 1, ILECO 2, and ILECO 3 reporting rates of 9.49 P/kWh, 10.46 P/kWh, and 8.41 P/kWh, respectively.
The Safety Net
In response to this energy crisis, the Energy Regulatory Commission (ERC) mandated a staggering of energy price hikes for electric distributors over a four-month period, ending in September 2024. This provides consumers with time to prepare for the rising costs. However, this only delays the inevitable surge in electricity across the region, which may potentially cause economic upheaval.
The Role of The Renewable Energy Act on Power Supply Crises
The transition to renewable energy provides long-term benefits for the entire planet, but the process of getting there entails the disruption of the previous power infrastructure, inadvertently causing problems such as the Iloilo power surge. This is due to the shutting down of coal plants in Panay, resulting in the region’s dependence on more expensive diesel to fuel their economy while widespread renewable energy sources remain unavailable.
MORE Power was previously consistent in its affordability, securing power supply at lower costs. Its acquisition prices fall at an average of 33.4% lower than those of ILECOs. Over the past year, it has maintained an average difference of 16.1% on its electricity rates.
However, the structural changes in power supply from weaning off of coal have hampered the energy provider’s ability to mitigate costs for Iloilo. MORE Power CEO Roel Castro notes the factors of the Panay coal power plants going offline, as well as constraints in the Barotac Viejo substation in Iloilo in preventing the region from securing cheaper sources of energy from Luzon and Mindanao.
MORE Power Vice President for Corporate Energy Sourcing and Regulatory Affairs Niel Parcon also notes the lack of investment in the power sector secured by the Philippine government, resulting in higher rates in the Wholesale Electricity Spot Market (WESM) and a failure to supply the country’s rising energy demand. The rising costs were further exacerbated by the use of renewable energy sources such as solar and wind, which are intermittent and need backup from diesel and coal to mitigate power outages.
Energy Transmission Roadblocks
The Philippine energy grid also has a role to play in the efficiency of energy transmission to the Iloilo region. The recently inaugurated Cebu-Negros-Panay Line 3 by the National Grid Corporation of the Philippines (NGCP) remains underutilized, causing energy congestion and limited access to energy sources from other regions. This results in Iloilo’s current dependence on costly diesel plants, hiking up both energy generation costs and consumer prices.
The Way Forward
For positive change in the energy sector to occur, we must be ready for it. Iloilo’s energy upheaval is a glaring reflection of the various infrastructural and economic deficiencies that the country must address to make progress.
Improvements are not instant, and forcing change before its time may destroy the achievements in energy security that the country has been working so hard for.
While renewable energy is still not sufficient to power the growing regional demands, coal provides an urgent and cost-effective solution to mitigate a potential power shortage disaster. AboitizPower’s Therma Visayas Inc. is urgently constructing a coal plant to provide energy security for the region, ensuring affordable and dependable power for Iloilo businesses and residents for years to come before the country’s success in transitioning to green energy.
Department of Energy chief Raphael Lotilla stated that the government remains committed to its push to increase renewable energy’s share in the power mix, while protecting the country’s energy security with sufficient existing energy sources until 2030.
He says, “While there is an existing moratorium on building coal-fired power plants, there are also exemptions for committed, indicative and expansion plans. “We have over 6,300 megawatts (MW) of dependable coal capacity aged 10 years or younger. These plants can be relied on to operate for at least another 30 years.
He adds, “Maximizing the use of existing energy infrastructure avoids placing an added cost burden on both the economy and consumers. We are prepared for the various scenarios of the energy transition and the relatively young age of these coal plants help ensure that we will have enough baseload capacity through to 2030.”
Source: Rising power costs push electricity rates in Iloilo higher