Consumers in Catanduanes will be forced to sweat through longer hours of rotational brownouts due to the ₱538 million worth of unpaid obligations of state-run National Power Corporation (NPC) to power supplier Sunwest Water and Electric Co. Inc. (SUWECO).

SUWECO, which operates at least five power plants in Catanduanes, indicated that it will reduce the operation hours of its three generating facilities in the province, and the naturally occurring consequence of that will be “further rotational power interruptions” that the people in the province will have to endure.

The company affirmed that the scheduled power service interruptions to be experienced by Catanduanes consumers from its Marinawa-1 plant will stretch from 3:00 to 7:00 am; then for its Marinawa-2 diesel plant, operations will be out from 7:00 to 10:00 am; while the availability of its Viga power plant will be curtailed from 5:00 to 7:00 am, then 3:00 pm to 5:00 pm.

The power firm said it previously informed First Catanduanes Electric Cooperative Inc. (FICELCO) of “scaling down our operations in Catanduanes because of NPC’s outstanding obligations with SUWECO.”

SUWECO explained “it is constrained to further scale down its operations in Catanduanes due to financial strains brought by NPC’s existing liability amounting to ₱480 million and ₱58 million,” – in reference to warranted subsidy and retro payments; adding that “as a result of NPC’s prolonged delay, SUWECO has no viable alternative but to reduce its operational capacity in the province.” 

Outgoing Energy Secretary Raphael Lotilla asserted that he wanted the situation in Catandanues checked by NPC for the sake of protecting the welfare of the consumers in the area; and prior to the announcement of his reassignment to another agency, the Department of Energy (DOE) has been exploring ways on how to secure added funding for the areas served by NPC’s Small Power Utilities Group (SPUG) with the help of the Department of Finance (DOF), so these domains could be spared from debilitating power service disruptions.

Separately, NPC President and CEO Fernando Y. Roxas conveyed that power supplier SUWECO will be pursuing a bidding for an emergency power supply agreement (EPSA) as part of the remedial measures to the brownout woes of consumers in Catanduanes.

The electricity supply agreement (ESA) between SUWECO and FICELCO was signed in 2007, and its hydro power plants commenced operations in 2010, while its diesel-fed generating facilities had been on commercial stream since 2014. Since then, the ESA has already gone through the first and second amendments.

Dispute resolution

In February and April this year, SUWECO, through its external counsel, sent a formal correspondence to NPC demanding the payment of the subsidy billings and retro billings relative to the Universal Charge for Missionary Alectrification (UCME) Agreement, which is a subsidy scheme for supplying power to off-grid areas, including that of Catanduanes.

However, it was pointed out that NPC “violated the dispute resolution procedures under the UCME Agreement when it unilaterally implemented hourly capping adjustments in subsidy payments without providing SUWECO the opportunity to clarify.”

Under the UCME Agreement, it was stated that “in case of dispute, NPC should provide SUWECO the opportunity to respond by submitting additional documentation to address the issues raised,” with the company stressing that “there is no evidence that NPC’s unilateral reduction had legal basis and that they had issued a written notice of dispute to SUWECO.” 

On NPC’s claim that the cost recoveries of SUWECO had been denied by the Energy Regulatory Commission (ERC), the company countered that in a decision rendered by the regulatory body on October 16, 2024, it was stipulated that the power supply delivered by SUWECO to FICELCO using its Viga and Marinawa diesel plants shall be “treated as a replacement power” to the first ESA amendment of the parties’ supply deal.

Referring to that, SUWECO argued that it “shall be paid based on the approved rate under the first ESA amendment, which is reckoned as “energy-based and annualized at 7.975 megawatts or 69 million kilowatt hours; and not capacity-based on an hourly basis.”

It was specified that if the sale of power would exceed 7.975MW, the capacity delivered “shall be paid based on the true cost generation rate and shall be shouldered by the cooperative (FICELCO), without subsidy from NPC.”

Had it not reduced the operational capacity of its power plants, SUWECO highlighted that it would have delivered 10,482 kWh of power to Catanduanes, but it needed to resort to trimmed operations “in order to secure the financial viability of SUWECO and to safeguard the interests of its stakeholders.”

The company nevertheless cautioned that “without intervention, the company’s ability to generate sufficient revenues to meet its financial obligations and sustain its operations would be at risk.”