Inter-Connecting Palawan and Mindoro to the Luzon Grid – Tightening the Loose Ends to Make Them Happen (Part 1)

Part 1

David Celestra Tan, MSK
24 July 2020

The Department of Energy has a sweeping plan to connect most of the off-grid areas to the national grid from Luzon to Basilan in its power development plans. We are not sure if such are even macro-economically justifiable unless we abandon the government’s obligation to provide affordable power in the isolated islands.  It is sensible however to eventually connect the largest islands starting with Palawan and Mindoro.

The idea of inter-connecting these two largest off-grid islands to the Luzon Grid has been kicking around at the Department of Energy for at least 15 years and in fact is carried over as a policy from previous administrations and made part of the DOE’s MEDP FOR 2016 to 2020 or Missionary Electrification Development Plan adopted at the start of the current administration.

And for good reasons.

Providing power supply to these islands is costing the government heavily in missionary subsidies and more so now that the missionary subsidies have increased 175% since 2015 even if energy consumption in these islands only increased 20% since 2016. The Subsidies are in turn charged to the national consumers and called UC-ME or universal charge missionary electrification which is currently P0.1561 per kwh. It will probably increase the way missionary subsidies are rising instead of decreasing.  It is a grave national consumer concern.

According to the findings of party-list Bayan Muna, Palawan is sucking up P1.766 Billion in subsidies in 2018 and P1.1866 Billion in 2019. Oriental Mindoro is P1.396 Billion and P1.292 Billion for the two years. Inexplicably, the other half of Mindoro island which is Occidental Mindoro and the smallest among the three electric coops, is taking up P1.655 Billion and P1.621 Billion for 2018 and 2019, the equivalent of a horrifying P15.90 per kwh in subsidy.  The two islands together absorb about 34% of the missionary subsidy for all of the 14 largest off-grid islands in the country. (The increases are at least half due to bureaucratic breakdown but that’s another story).

Despite the increases in subsidies, power service on Palawan and Mindoro islands continue to be unreliable. The worst is Occidental Mindoro, then Palawan, and Oriental Mindoro which is not so bad.

For both problem Islands the causes are however myriad and need more than just bringing in industrial grade 230kv power to fix. Even on the island of Mindoro, the problems of Occidental Mindoro are vastly different from those in Oriental Mindoro. All these issues need to be addressed in a complete plan to make the inter-connection happen. 

Attempts at Inter-Connection

The task of making the inter-connections happen falls on the National Grid Corp. of the Philippines or NGCP who is the concessionaire for the national grid and interested in expanding the reach of its concession area. And they have been raring to build a 230KV submarine cable and overhead lines because it means transmission revenue to them whether the inter-connection makes sense or not. Officially, it is their obligation to build the P20 billion inter-connection because they are being asked by the government through the Department of Energy. 

NGCP’s first proposal 

NGCP originally proposed in 2010 to implement a Batangas to Mindoro connection and applied for approval with the ERC. Presumably the application had the endorsement of the DOE and came very close to approval. The project will cost P11.9 billion. A 25 kilometer 230KV submarine cable will be built from Batangas to Calapan City in Oriental Mindoro. From there a 230kv overhead transmission line of almost 215 kilometers will be built all the way to San Jose in the Southwestern most tip of the Mindoro Island on the Occidental Mindoro side.

On the surface the project seemed logical except the proponent NGCP struggled with the purpose and justification for the project when asked in intervention. For whose benefit is the P11.9 billion inter-connection being done? The consumers of Mindoro or those of Luzon? That was important because it determines who will pay for the cost of recovery. If it is for the Mindoro consumers, they will pay for the cost as “transmission charge” and lose their missionary subsidy. That can be a lot per kwh because there is only 70mw of power demand on the whole island. Finally, NGCP representatives said it will be recovered from the Luzon consumers with a P0.04 per kwh addition to the transmission charge. Why? Their documents said “Luzon consumers would benefit from a 300mw coal power source that will be built on the southern part of the island”.

Your organization MSK as an intervenor asked if it will not be cheaper for us in Luzon to buy the 300mw from the many power projects in Luzon instead of paying for P11.9 billion for a source in Mindoro Island.  On further geographical analysis, the claimed coal source in Bulalacao town turned out had long been declared unviable by the DOE and the closest coal mine is 30 kilometers away…. on another island of Semirara.

NGCP’s application made no mention at that time of an on-ward connection to Palawan. People wondered why the 230kv line will go all the way to San Jose that has only a 15mw demand?  Is it only a coincidence that San Jose is just 20 nautical miles away from the country’s  main domestic coal producer Semirara where a mine mouth coal plant of as much as 600mw can be built and gain access to the lucrative Luzon market? Local Coop OMECO may have unintentionally spilled the beans on the NGCP narrative when it issued an endorsement welcoming the supply of power from Semirara.

Actually, we never got an answer from NGCP in 2011 and we thought the project was shelved by the ERC. 

In the last years at the provincial level,  Semirara coal power is being promoted as the “murang kuryente” solution for Mindoro by building a submarine connecting line to Bulalacao town from Semirara. There is nothing wrong with this business proposition except that there is uncertainty on WHEN the “cheaper coal power” will be delivered and who will pay for the cost of the 25km connection line to Oriental Mindoro. Otherwise, the government and consumers will be stuck again with an expensive “interim power supply” just like in Palawan in the last 8 years. Worse, there are signs that the provincial government of Oriental Mindoro is reportedly being lobbied to pay for part of the cost of inter-connection in the name of “provincial economic development”.   The anti-coal movement in Mindoro is in a tizzy.

NGCP Inter-Connection Part 2 

Almost 10 years after its first application, NGCP again applied for this time a Palawan via Mindoro connection, also 230KV with acronym PMIP on 14 March 2019. On May 28 the ERC issued an order scheduling it for public hearings from June 17 to July 16.  NGCP was seeking an urgent Provisional Authority from the ERC, dubbed case No. 2019-022RC, to undertake a” Stage 1 which will include “the Desktop, System & Feasibility Studies and Hydrographic Survey of the submarine cable route of the Palawan-Mindoro Interconnection.”

NGCP’s documents said “the estimated cost of the proposed project is Php 6,384.783 Million (or P6.384 Billion) with an implementation period of 27 months for the conduct of the Desktop, System & Feasibility Studies and Hydrographic Survey; and 60 months of the development of the Mindoro Backbone.

In this latest curation of the Mindoro Inter-connection, the NGCP proponents are citing the urgent need to start the project because Palawan is suffering from unreliable power service due to the failure of the IPP’s to deliver and that President Duterte had complained in a trip to Palawan about the bad power service.  In the process they are asking for ERC permission to start urgently the Mindoro transmission “backbone” as the first requirement to achieve a Palawan inter-connection.  This time Palawan seems a Trojan horse by tucking in the Mindoro project for approval as part of what they bundled now as an “urgent” PMIP project. 

(Many people in Palawan actually suspected that the sudden brownout on November 10, 2018 just as President Duterte was to arrive in Puerto Princesa was deliberate and may have been intended to manipulate the President to calling for an urgent improvement in the system complete with a warning to the local coop to shape up or be privatized).

We understand that the ERC did not decide on NGCP’s Palawan application 2019-022 RC because the original Batangas Mindoro inter-connection was actually not decided in 2011. It is fortunate that some people in the ERC seemed to be asking the right questions.

Nonetheless, you cannot help but wonder why the plot is continuing to thicken? 

Next: The loose ends that need to be tightened to make the inter-connections happen.

Matuwid na Singil sa Kuryente Consumer Alliance Inc
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david.mskorg@yahoo.com.ph