A vice-chairperson of the House Committee on Trade and Industry is crossing her fingers that Mindanao will never get to experience Luzon-level electricity rates, which is what the Mindanao Development Authority (MinDA) is projecting for the near future.
“I hope Mindanao can keep its rates where they are now. We want Mindanao to prosper, we want industries to go there,” Nueva Ecija 3rd district Rep. Rosanna “Ria” Vergara told MinDA Assistant Secretary Romeo Montenegro on Tuesday during a virtual hearing of the House Committee on Mindanao affairs.
“Your climate there is perfect, you don’t get too much typhoons,” Vergara said, adding to what she described as “attactive power rates” in Mindanao.
The Mindanao Affairs panel, chaired by Lanao del Norte 1st district Rep. Khalid Dimaporo, called for the hearing to make House members aware of the current power situation down south. “We are already dealing with another type of power issue in Mindanao–no longer just a supply problem but another dimension,” Montenegro said during his presentation.
Somewhat alarmingly, he said the power mix in Mindanao is now 70 percent fossil fuel or non-renewable energy (RE) and 30 percent RE. “Today is a complete reversal of where we were five or six years ago when Mindanao enjoyed a 60-40 (RE vs. non-RE) energy mix.”
“This is all on account for the need for Mindanao to be able to address its surging demand for additional capacity,” he said, noting the “mushrooming of malls, real estate projects and expansion of industries” in the region.
“What kicked in in the Mindanao grid during the last five or six years were mostly coal power capacities, which are much easier to install and quicker to grow through compared to RE…this also translated to roughly around 11 to 20 percent variation in terms of our electricity rates. You definitely would be able to notice this comparing the electricity bills you were paying six years ago to what you are paying today,” he said.
Montenegro acknowledged that historically, Mindanao’s competitive advantage over Luzon and Visayas has been its cheaper electricity rates. But this may be about to change.
“Our electricity rates in the near run will have to achieve parity with Luzon already because we share the same profile in terms of energy mix with the rest of the country…(because) there is huge reliance now on imported technology in terms of sources of energy like coal, that to a certain extent has created a dent on our competitiveness,” the MinDA official said.
“Well, see, I hope not, you know. I hope not,” Vergara replied.
“We have the highest electric rates in Asia and I hope Mindanao is able to keep that balance where your rates are very competitive,” said the Trade and Committee panel vice-chair.
“That’s my concern. I’m very worried that once WESM (Wholesale Electricity Spot Market or WESM) starts in Mindanao as it has in Luzon, I’m worried that the WESM rates might actually hurt the power rates in Mindanao the way that it is affecting the power rates in Luzon,” added the lady lawmaker.
An expected consequence of costlier electricity in Mindanao is the exodus of businesses there, which would in turn hurt the local economy. At the same time it makes the region less attractive to new investors.
Montenegro said power demand in Mindanao peaked at 2,000 megawatts (MW) last year, up by 700 MW six years ago. “(This is) consistent with our projection that Mindanao is growing by 100 to 150 MW (in) average demand every year,” he said.