Ngerulmud — As the Senate Energy, Public Utilities, and Telecommunications (EPUT) Committee debates the legality of Palau’s new tariff system, the House of Delegates passed an amendment ensuring the continuation of energy subsidy programs under the recently implemented Distributed Energy Rate (DER) system. This amendment replaces the outdated Automatic Fuel Price Adjustment Clause (AFPAC), aligning energy laws with regulatory changes made by the Palau Public Utilities Corporation (PPUC) and the Palau Energy and Water Administration (PEWA).
On May 14, 2024, PEWA proposed a significant overhaul of Palau’s energy pricing structure, shifting from AFPAC to DER. President Surangel Whipps Jr. formalized these changes by signing new grid regulations on July 5, 2024, and the DER system officially took effect on October 1, 2024. The new tariff system aims to stabilize energy costs, but existing legal references to AFPAC in Section 22 of RPPL 11-37, which support water, wastewater, and lifeline subsidy programs, have left the subsidies in legal limbo.
The proposed amendment addresses this gap by replacing all AFPAC references with DER in Section 22 of RPPL 11-37. This update will preserve the legal foundation of key energy subsidy programs, safeguarding financial support for Palau’s residents.
The amendment outlines a $2.91 million allocation for Fiscal Year 2025 to fund PPUC’s subsidy programs. This includes $960,000 for water and wastewater, $1.7 million for electricity, and $250,000 for the Lifeline Subsidy Program. Water and wastewater subsidies will cover up to 2,500 gallons per month, while electricity subsidies will reduce DER rates by $0.10 per kilowatt-hour for up to 500 kWh per residential customer per month.
Legislators stress that updating the law is crucial to prevent disruptions to these vital subsidy programs, which provide financial relief to residents facing rising utility costs. The amendment aims to ensure a smooth transition to the DER system without negatively affecting the financial assistance programs.
House Bill 11-154-16 passed its third reading on October 12, 2024, and will now move to the Senate for further deliberation. However, with ongoing debates between the Senate and PPUC over the new tariff system, the bill’s future remains uncertain. (By: L.N. Reklai)