Cagayan de Oro, Region X has highest power rates in Mindanao

Average Power Rate in CDO up 71.6% since 2016

It is ironic that despite demand for electricity heading south, power rates in Region X are heading north.

A recent update on the power situation in Mindanao has revealed that Cagayan de Oro and Northern Mindanao now has the highest power rates in the whole island.

According to a presentation made recently by the Mindanao Power Monitoring Committee (MPMC) to the Association of Mindanao Rural Electric Cooperative (AMRECO) and the National Electrification Administration (NEA) on 17 September 2020, Region X has the most expensive average power rates among private distribution utilities (DUs), and the most expensive average rate among electric cooperatives among the island’s six regions.

The MPMC data revealed that the Cagayan Electric Power Co. Inc. (Cepalco) has the most expensive power rate among Mindanao’s private DUs at P10.8528 per kilowatt hour as of March 2020.

In contrast, the Cotabato Power and Light Co. has the lowest at P7.1717 (-33.9%) and Iligan Power and Light Co. which has the next highest rate at P9.3375 is still 14% cheaper compared to Cepalco.

Cepalco power rates from 2016 to March 2020 also registered the highest increase at P4.5289 per kilowatt hour or 71.6% over the period.

Meantime, none of the three other private DUs in Mindanao registered a double digit rate increase for the period: ILPI has the next highest rate increase for the same period at 7.4% followed by CLPC with 1.5%, and DLPC, which has an even bigger franchise area than Cepalco, even managing to reduce its average rate by -3.3% from P7.4420 in 2016 to only P7.1961 by March 2020.

Largely because of Cepalco’s tremendous power rate increase, the average power rate among Mindanao’s four private DUs increased by P1.2577 or 17% to P8.6395 despite the single digit increments of CLPC and ILPI and DLPCs -3.3% rate reduction.

An industry insider who prefers to remain anonymous said the tremendous increase in electricity rates in Cagayan de Oro is a result of Cepalco sourcing up to 85 percent of its electricity from the Minergy Power Corp coal plant in Balingasag, Misamis Oriental and other affiliate generating companies.

Thus, the rise in power rates within the Cepalco franchise area could be attributed primarily to the rise in generation rates as a result of the shift to the MPC coal plant and not to the transmission and distribution aspects of the franchise operations. It is also true of other distribution utility companies in Mindanao that the increase in rates is in the generation component.

Region X power coop rates most expensive

Similarly, it was revealed that Region X also has the most expensive average rate for its electric coops at P10.9915 per kilowatt hour as of March 2020.

In comparison, the BARMM has the lowest rate at P7.61 (-31%), Region XI P8.9743 (-18.4%), Region XII P9.04 (-17.8%), and Caraga P9.53(-13.3%).

In addition, the P10.9915 average rate of all power coops was also 16%  more expensive that the P9.2180 average rate for all coops in all regions in Mindanao, and 18.8% more expensive than the P8.9287 average rate for all DUs in Mindanao.

Mindanao Power Situation

When queried about the rising power rates in Northern Mindanao, particularly in the Cepalco franchise area, Assistant Secretary Romeo M. Montenegro, Deputy Executive Director and Head of Investments Promotion of the Mindanao Development Authority’s (MinDA) International Relations and Public Affairs Office said power rates in Mindanao are dependent on the contracting portfolio of ECs and DUs.

“With most ECs and DUs in Mindanao now heavily contracted to more expensive technology to meet its long term demand, then the cost of electricity moved along the same upward direction” Montenegro stressed.

“As Chair of the Mindanao Power Monitoring Committee (MPMC), MinDA had reached out to various partners and stakeholders to convey the present Mindanao power situation and proposed measures to DOE, House Committee on Mindanao Affairs, AMRECO, NGCP, consumer advocate groups, renewable energy advocates, and other key players,” he added.

Also ongoing is a study supported by USAID on the impact of COVID-19 to the Mindanao power sector particularly the electric cooperatives that is set to be presented by December.

Not the least, Montenegro disclosed these other MPMC initiatives aimed at improving the power situation in Mindanao:

1. Request ERC to consider postponing plan to reduce system loss threshold to 5% from current 6% to deal with the current system loss problem;

2. Requesting NGCP to prioritize certain long overdue Mindanao transmission upgrading;

3. Urging ECs and DUs to implement measures to improve collection efficiency;,

4. Requesting power generating companies to waive Minimum Energy Offtake (MEOT) or set on negotiated settlement;

5. Requesting NEA to propose/implement innovative financing window for severely affected ECs;

6. Urging the House Mindanao Affairs Committee to secure increased allocation from DBM to support Mindanao rural electrification targets; and

7. Studying the proposed establishment of a Local Power Development Advisory mechanism for better coordination between the ECs, LGUs and key local stakeholders in addressing power related problems, which include, among others, right of way issues, line tripping due to vegetation and refusal of landowners to cooperate, and non-payment of electric bills. 

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