Koror, Palau – Residents of Palau will see a slight increase in their electricity bills starting next month despite the incorporation of solar energy into the power grid.
The Palau Public Utilities Corporation (PPUC) announced a 4-cent per kilowatt-hour (kWh) increase in the energy rate, effective May 1st, 2024. This comes as PPUC begins purchasing power from a new solar power plant operated by an Independent Power Producer (IPP).
While the current total rate sits at 34 cents/kWh, with a breakdown of 28 cents/kWh for fuel and 6 cents/kWh for energy, the fuel rate will remain unchanged. The 4-cent increase applies solely to the energy rate.
Public perception anticipated a decrease in electricity costs with the introduction of solar power. However, the contract between PPUC and the IPP sets the purchase price of solar energy at 14.25 cents/kWh, higher than the current fuel cost.
This translates to a $4 increase for a typical household consuming 100 kWh monthly, with their bill rising from $34 to $38. Commercial operations will also see a 4-cent/kWh increase.
PPUC Chairman Belechel acknowledged the initial rate hike but emphasized long-term benefits. Last month, PPUC reported that using solar energy during favorable weather conditions allows them to shut down diesel generators, leading to reduced fuel consumption and maintenance costs. While a timeline for these savings to be reflected in consumer rates remains unclear, the corporation expects future cost reductions.