Panay Power warns of blackouts in Iloilo if plant shuts down

Panay Power Corp. (PPC) has warned that Iloilo City may face power outages in the coming days if the 72- megawatt (MW) diesel facility it owns and operates is forced to stop operations due to continued losses.

PPC vice president Arman V. Lapus said the company’s losses are brought about by under-payments by the Panay Electric Company (PECO) following a recent decision by the Energy Regulatory Commission (ERC).

"Much to our regret, the Panay power plant will be forced to shut down by Dec. 15 as we can no longer sustain our operations under the present situation," Lapus said.

Lapus said an ERC decision reached last September pegging electricity generation rates charged by PECO in Iloilo City to that of the National Power Corp. (Napocor) has led to PECO’s failure to pay PPC the full amounts due under their power supply contract.

"To date, total receivables from PECO already amount to more than P250 million. If we are not paid what is due us under our contract, we can no longer sustain our operations beyond Dec. 15. This may lead to a severe power shortage and widespread outages in Iloilo City," Lapus said.

"While we respect the ERC decision, pegging PECO’s generation rate to Napocor’s will not allow PECO to pay us the full amount under our contract. They can collect only so much from the consumers. What they pay us is not even enough to pay for our fuel cost. We are hoping that an immediate solution will be arrived at, to allow us to provide reliable and efficient electric service for the people of Iloilo City on a sustainable basis," he added

Last September, the ERC slashed by P2 per kilowattthour (kwh) PECO’s rates to its consumers. To make up for this, PECO has cut payments to PPC correspondingly.

PECO is presently petitioning the ERC to restore the old formula that is higher than the Napocor rate.

The increased rates will just cover fuel cost and foreign exchange fluctuations. It will not translate to higher profits for PPC.

The Panay plant, Lapus said, has fuel inventory to last only until Dec. 15. It may not be able to pay for fuel beyond that date due to the cash flow problem as a result of the ERC decision.

PPC is owned and operated by Mirant Global Corp., a joint venture between Mirant Philippines Corp. and Global Business of the Metrobank group.