By Rjay Zuriaga Castor
The province of Iloilo is estimated to have suffered a total of P3.737 billion in economic losses following a power outage on Panay Island in early January 2024.
“The total combined as far as from our three distribution utilities (DUs) is estimated at P3,727,264,984, as far as economic loss in their coverage municipalities,” said Mario N. Nillos, head of the Iloilo Provincial Planning and Development Office.
But how was the province able to determine the estimated economic losses?
Nillos explained that they used a formula measured by the value of lost load (VoLL), a monetary indicator expressing the costs of interrupting electricity supply at a macro level.
VoLL was developed by the Philippine Independent Power Producers Association Inc. (PIPPA), an organization of the country’s energy generation companies.
“They have a variable which says that for every megawatt hour power loss in five hours, that is translated into P556 million in economic losses. For an hour of operation, that is one hundred megawatt loss and is equivalent to P111.2 million. That’s what we derived and computed with the data from the DUs,” he said.
Nillos said the three DUs in the province supplied the provincial government with data on their total energy loss in megawatts and the duration of power interruption.
The three DUs in the province are the Iloilo Electric Cooperative, Inc. (ILECO) I, II, and III.
“They provided us with the data […] What we did is since they already have a translation or a computation as to the monetary value or the economic losses in their coverage areas,” Nillos said.
Based on the computation, ILECO 1 incurred an estimated economic loss of P1.7 billion, P1.1 billion for ILECO II, and P891,320 for ILECO III.
Nillos added that the estimated losses translate to economic losses in the residential, commercial, and industrial areas, including their increased operational expenses during the power outage.
In Iloilo City, its Local Economic Development and Investment Promotion Office calculated the estimated economic loss using the city’s annual Gross Domestic Product from the previous year.
Based on their rough estimates, Iloilo City faced a revenue deficit of around P400 million to P500 million daily.
Citing the massive economic loss of the province, Nillos said that “any figures would tell that it indeed should not happen.”
“The economic loss is substantial because the implication is that Region 6 is one of the highest-performing regions, and likewise the province and city,” he added.