Senators killed the resolution that endorsed the implementation of the Power Purchase Agreement (PPA) between the Palau Public Utilities Corporation (PPUC) and the Engie Electric Power Systems (EPS) in a vote of 11 to 1, with the majority voting against it, during a special session held on December 6.
House Joint Resolution 10-35-8 HD1 endorsed the deal allowing Engie EPS to invest about $80 million to build and operate a 35MWp solar power plant with 45 MWh storage battery and sell electricity to PPUC at 20 cents per kilowatt hours for the next 30 years.
Forty-five percent of PPUC’s electricity will come from this solar project and 55% will be generated by PPUC’s existing diesel generators, reducing Palau’s energy dependency on imported fuel by nearly half.
The House Joint Resolution was to allow the government of Palau to guaranty PPUC’s debts to Engie EPS should PPUC fails to pay for electricity from Engie. It would also allow Palau government to be sued in case of legal dispute.
The Senate Committee report on the joint resolution states that the committee has serious misgivings on the agreement and does not recommend the adoption of the Joint Resolution.
It also cited concerns that the process of obtaining the contract did not follow law such as lack of regulations by PEA for approving PPAs, questioned whether resolution has the force of the law to grant sovereign guaranty and sovereign immunity and protested the language that prohibits lawmakers from making laws that would impede fulfillment of agreement, and the length of contract among others.
Furthermore, the report expressed concerns about the cost of the agreement citing falling cost of solar PV technology, the length of the contract and the waiver of taxes.
Earlier, Energy Grants Coordinator Tutii Chilton responded to Chairman Rukebai Inabo’s questions citing basis for their approval of the project. Chilton cited JICA’s report on project to upgrade Palau’s power grid and its estimated costs for Palau’s transition to renewable energy.
Expert analysis by U.S National Renewable Energy Laboratory, operating agency for Clean Energy Solutions Center, assisted PEA and PPUC to come up with tariff for solar pv projects and different scenarios where renewable energy targets impact electricity rates for customers which was applied on this project.
“It is sad that Chairman of the Committee Rukebai Inabo didn’t seat down with us and work for solutions rather than put politics above the good of Palauans,” stated President Remengesau Jr. in a phone interview with Island Times. “Laws and resolutions, these fall under OEK and they can make laws to say what they want to be stated.”
“Reputable analysis has been made on the project and experts have said Palau should be congratulated on this deal but sadly, rather than working for solutions, they looked for ways to kill it,” added Remengesau.
“Bottom line, solar energy is good for the environment, affordable and efficient and cheaper for the next 30 years. We will work with the people of Palau to get this to work…this is a good solution for the family, business and government…it’s not over,” assured Remengesau.
Recently Mr. Herbert Wade of Pacific Power Association, an expert on renewable energy expressed his opinion on the project stating that it was “extraordinary.”
Senate Committee states it is not convinced that the agreement is best for Palau “because there are still so many unknowns concerning whether the price is fair…”
“Falling fuel prices and the global downward trend in the cost of solar PV technology raises questions on whether the fixed 20 cents per kilowatt hour is justified…and that Palauan people can demand better price.”
Furthermore, Committee states that year 2025 is target year for achieving 45% renewable energy and that there is time and room for improving the deal.
Electricity cost is a major component of Palau’s household and business expense and government appropriates funds each year to subsidize power for low income consumers. This year it appropriated $1.6 million to pay PPUC’s first loan payment in order to keep PPUC rates from being raised to cover the loan payment.
Senators Hokkons Baules, Regis Akitaya, Rukebai Inabo, Uduch Senior, John Skebong, Dr. Stevenson Kuartei, Frank Kyota, Camsek Chin, Mason Whipps, Kerai Mariur, and Mark Rudimch voted against the resolution with Senator Phillip Reklai voting for it. Senator Aric Nakamura, the only member of the committee that didn’t sign the report, was not present.
The resolution was earlier endorsed by 16 delegates. Palau Council of Chiefs, Governors Association and Speakers Association had also earlier expressed support for the project. (L.N. Reklai)