Negros and Leyte Geothermal Sat Out Q2 While EDC and LGUs Argued Over a Tax Bill

Two geothermal expansions that the Department of Energy already counted toward 2027 supply, Negros Oriental's Southern Negros field and Leyte's Tongonan complex, have not broken ground this quarter. The holdup is not steam or seismic. It is a tax bill nobody wants to absorb.

Energy Development Corporation and the host LGUs have spent months in circular meetings over who covers the host community share now that recent jurisprudence on Real Property Tax exposure for geothermal assets shifted the math. The provinces and municipalities want the one-centavo-per-kilowatt-hour host community benefit under ER 1-94 and the EPIRA framework kept whole. EDC's position, as reported by industry trackers, is that the widened RPT exposure assessed and collected by the LGUs themselves already eats the margin that funded those benefits in the first place.

The auction already spent the megawatts

The DOE's Green Energy Auction rounds, which contract forward delivery of renewable capacity, were structured on the assumption that these expansions would land on time. Visayas distribution utilities planning their 2027 supply mix have been pricing against that schedule. If the megawatts slip, the gap gets filled by whatever is dispatchable on short notice, which in the Visayas means imported coal and bunker peakers that pass straight through to the generation charge.

That is the part the household reader will feel. A delayed geothermal commissioning in Valencia or Kananga does not stay in Valencia or Kananga. It shows up on a Bacolod or Tacloban bill twelve to eighteen months later, and the ERC will approve the pass-through because the supply was contracted in good faith.

The host community centavo is not a rounding error

For Negros Oriental and Leyte LGUs, the P0.01/kWh levy and the RPT collections fund actual line items: barangay health stations, scholarship slots, farm-to-market roads in the upland sitios that sit on top of the steam field. Local officials have signaled they will not absorb a swap that quietly folds the community benefit into the tax line, because that turns an entitlement under national law into a budget trade they cannot reverse.

EDC has indicated that the project economics were modeled before the tax exposure widened, and that the company cannot unilaterally eat both. Somewhere between those two reads of the same law is the Department of Energy, which set the 2027 target, and the Department of Finance, which has not issued the implementing guidance that would let the LGUs and the developer share a single arithmetic.

What stalling actually costs

Geothermal is the one renewable in the Philippine mix that runs at night, runs in the habagat, and does not need a battery to be useful to the grid operator. Every quarter the Visayas expansions sit idle is a quarter the 2030 renewables target gets quieter about. It is also a quarter that coal contracts get renewed, because the dispatch has to come from somewhere.

The fix is not complicated to describe. DOF issues the RPT guidance. DOE convenes EDC and the provincial governments at one table with the numbers on screen. The host community centavo stays whole, the tax gets paid, and the difference gets absorbed where the forward auction priced it. None of that has happened. The 2027 delivery date has not moved. The bill, when it lands, will read Negros Power, NORECO, LEYECO, and the line item will say generation charge.