DAVAO CITY – Electricity rates in Mindanao are expected to increase following the outbreak of war between Russia and Ukraine affecting the global supply of diesel and price movement of coal in the global market, Mindanao Development Authority (MinDA) assistant secretary Romeo Montenegro said.

Montenegro said that the majority of Mindanao’s generation mix came from fuel sources, particularly diesel and coal, which are easily affected by external factors such as market volatility and fluctuation in foreign exchange.

According to the data released by MinDA, Mindanao has a total system capacity of 2,751 megawatts (MW).

Out of this total, coal sources account for more than of Mindanao’s generation mix at 1,490.5MW or 54%; 523.2 MW or 19% diesel; 591.2 MW or 21% hydro; 75 MW or 3% geothermal; 56.9 MW or 2% solar; and 14.9 MW or 1% bio, according to the data released by MinDA.

“Spike in rates is likely, with diesel accounting for 19% of Mindanao's generation mix. With world market prices of coal spiking as well, then it's going to result in a bigger rate impact to consumers since coal dominates Mindanao's generation mix at 54%,” he said.

A series of fuel price hikes has been implemented as a result of the Russia-Ukraine crisis.

Montenegro said that this is the downside reality of a grid, which is heavily dependent on fuel sources.

He said that the cost variations for fuel spikes are recovered by power industry players through Generation Rate Adjustment Mechanism (GRAM) and passed on to electricity consumers.

To address similar problems in the future, he said MinDA is “promoting accelerated renewable energy deployment” under the “distributed generation strategy,” which “promotes greater local participation, along with local government units and local electric coops or distribution utilities opting to have the renewable energy power projects as embedded generation.”