ERC probes Visayan Electric to explain ‘high rates’

·4 min read

THE Energy Regulatory Commission (ERC) has ordered the Visayan Electric Company to submit an explanation over its alleged high power rates.

In a letter dated Jan. 4, 2021, ERC chairperson and chief executive officer Agnes Devanadera directed the Visayan Electric to submit an explanation regarding the high electricity rates charged by it and its perceived violation of Section 45 (b) of Republic Act 9136 of the Electric Power Industry Reform Act (Epira).

Section 23 of the Epira mandates that distribution utilities, Visayan Electric included, have the obligation to supply electricity in the least cost manner to its captive market, subject to the collection of retail rate duly approved by the ERC.

Based on the available records of the ERC, Veco sources its power requirements from its independent power producers (IPP), namely: Cebu Private Power Corp. (CPPC), Green Core Geothermal Inc. (GCGI), Cebu Energy Development Corp. (CEDC) and Therma Visayas Inc. (TVI).

For the billing periods of January to October 2020, Visayan Electric’s power purchased from CPPC, TVI and CEDC was equivalent to 65.18 percent of its total power requirement.

Visayan Electric’s average generation rate for the same period for TVI was at P5-5584/kilowatt hour (kWh), GCGI P4.8922/kWh, CEDC P5.6821/kWh while the Wholesale Electricity Spot Market was only at P2.5946/kWh.

The letter addressed to Raul Lucero, president and chief operating officer of Visayan Electric, noted that distribution utilities may enter into bilateral power supply contracts subject to review by the ERC, provided that such review shall only be required for distribution utilities whose markets have not reached household demand level.

For the purpose of preventing market power abuse between associated firms engaged in generation and distribution, no distribution utility shall be allowed to source from bilateral power supply contracts more than 50 percent of its total demand from an associated firm engaged in generation but such limitation, however, shall not prejudice contracts entered into prior to the effectivity of the law.

ERC, however, said that the purchases made with CPPC, from the billing months of January to October 2020, averaged at P35-3852/kWh, with generation rate being significantly high at P1,470.90/kWh for the month of September 2020.

“Relative thereto, Visayan Electric is hereby directed to submit an explanation on the above observations as well as the CPPC’s generation rates in relation to the least cost principle required by Republic Act 9136 and its comments/explanation on the alleged violation of Section 45 (b) of the Epira within five days from receipt hereof,” Devanadera said.

Visayan Electric told Sunstar Cebu it will answer the issues raised within the given period.

Reprieve

Kenneth Cobonpue, chairman of the Regional Development Council (RDC) in Central Visayas, said various business and consumer groups have addressed their concerns to the RDC.

“It is my duty as chairman to elevate this to the national level. I truly hope that with the help of the ERC, the Office of the Presidential Assistant for the Visayas and the management of the Visayan Electric, we can finally find a solution and compromise to our decade-long costly power problem. We are determined to see this through,” he said.

The Economic Development Committee (EDC) recently appealed for the intervention of the RDC 7 to request national government agencies to act on the issues raised by the Cebu Chamber of Commerce and Industry (CCCI) on the high cost of power as a major hurdle in business competitiveness.

CCCI raised the concern by comparing the latest power rates across the country, which showed Cebu’s power cost as the highest in the Philippines.

EDC chairman Virgilio Espeleta said this development will benefit the general public in terms of lower residential electricity prices.

“And hopefully Cebu’s electricity rates will not be the most expensive in the country so that we can attract businesses to open or relocate in Cebu. Of course, during this pandemic-induced economic situation, with the cost of power being in the top three of major costs of doing business, a reduced rate is what businesses need as a reprieve to survive,” he told SunStar Cebu.

CCCI president Felix Taguiam, in a statement, welcomed this development.

“For the longest time, we have been complaining about Cebu’s high electricity rates. We hope that ERC’s probe on Visayan Electric’s rates will eventually result in cheap power that will propel Cebu to be more competitive, especially in this time of pandemic where many are suffering. Visayan Electric’s decision to lower the cost will be its greatest legacy to Cebu, the very place where it came from,” he said.

“At the end of the day, the CCCI is only faithful to its role as the engine of Cebu’s business growth towards global competitiveness and the voice of the business community. We will continue to seek ways to be more relevant to our members and be the catalyst of growth for Cebu’s business community,” he added. / JOB