Power rates for all consumers increased by an average of 37% from previous rates based on the tariff approved by PPUC last year. The new rates went into effect this month, causing a public outcry, and the government stepped in with $1.5 million to subsidize the cost of fuel at PPUC to keep the rates down.
The controversial solar project that PPUC embarked on nearly 6 years ago to help reduce and maintain power costs while meeting renewable energy goals was delayed but is now ready to start construction in the 2nd quarter of 2022.
The Independent Power Producer (IPP) solar energy project will begin construction after April, reported Anthony Rudimch, a civil engineer at Palau Public Utilities Corporation.
“The contract has been signed but won’t become effective until five required conditions are met, and three of those conditions have already been fulfilled,” added Rudimch. April is the deadline for the five conditions to be met. Once the conditions are met, the clock starts for the project and they have 365 days to finish construction, explained Rudimch in an interview with Island Times.
The five conditions include PEA approval, gov’t support agreement, signed lease agreement, right of way agreement, and escrow account agreement. The signed lease agreement, right of way agreement, and PEA approval are complete, while the remaining are near completion.
PPUC Board approved the IPP contract with Solar Pacific in 2020 and Palau Energy Administration (PEA), an energy regulatory body, approved it in January 2021. Flight restrictions and border closures have caused delays to the project’s implementation.
“With more time passing and cost of materials going up, the negotiated rate under the purchase agreement has not changed. The IPP has agreed to shoulder the increased cost which is why we put a deadline of April. We don’t want to delay. The more we wait, the cost of materials keeps increasing until it becomes too expensive and the vendor may ask for an increase or walk away.”
The IPP is intended to build and operate a 20MW solar generation facility and sell power to PPUC for an agreed price and terms as negotiated in the Power Purchase Agreement.