THE Visayan Electric has terminated three contracts from its power suppliers in a bid to reduce the power rates in its franchise area.
Power supply contracts of the Aboitiz Energy Solutions Inc. and Vivant Energy Corp. were both terminated in October 2019 while contract with the Cebu Private Power Corp. (CPPC) was discontinued in August 2021.
Impact of these terminated contracts will be reflected in the October billing statement.
Visayan Electric now gets power supply from Cebu Energy Development Corp., Therma Visayas Inc. and Green Core Geothermal Inc.
Raul Lucero, president and chief operating officer of Visayan Electric, has yet to determine the exact dip in electricity rate as the distribution utility firm has yet to receive the billing from the Wholesale Electricity Sport Market (WESM).
Lucero said after concluding the contract with the CPPC, whose rate was the most expensive among all of its power suppliers, Visayan Electric turned to WESM to source power but its rates are changing hourly.
WESM is a venue for trading electricity as a commodity. The industry participants, particularly the generation companies submit offers to sell energy by offering it for sale at a certain price on an hourly basis.
Visayan Electric’s initiative to re-evaluate and re-negotiate some of its long-term power contracts was triggered by the call of the business and consumer groups to address the high power rates in Cebu. The issue was escalated to the Regional Development Council 7. The Energy Regulatory Commission (ERC) also probed the utility firm of the alleged high electricity rates.
The Cebu Chamber of Commerce and Industry (CCCI) asked the ERC to review the contract between Visayan Electric and CPPC.
The CPPC power plant was constructed by East Asia Diesel Power Corp. for Visayan Electric Company (former name of Visayan Electric) under built-operate-transfer scheme for a 15-year cooperation period which ended in November 2013. However, a new supply contract for another 10 years was entered into and approved by ERC.
CPPC capacity fees are passed on to Visayas Electric consumers amounting to roughly P66 million a month, on top of the generation cost, according to CCCI. CPPC’s per kilowatt hour rate ranged from P26 to P1,470.92 in 2020.
“Cebu’s electricity has always been one of the most expensive power rates in the country,” CCCI previously pointed out.
Visayan Electric invited the CCCI to participate in the competitive selection process as the third-party member of the bids and awards committee to ensure transparency in the contracting process to which the CCCI declined. Only the Mandaue Chamber of Commerce and Industry accepted the invitation in April this year.
“This is part of our effort to make our process transparent. We are always willing to work with our stakeholders in unpacking their concerns and finding a reasonable solution,” Lucero, previously said.
After terminating three contracts, Lucero said, they are now in talks with Green Core to reduce the capacity it is supplying to the Visayan Electric.
“We are trying to renegotiate to bring down some of the capacities from Green Core,” said Lucero, noting that the power cost from this geothermal plant is also expensive.
Visayas Electric’s total contracted capacity now stands at 291 megawatts (MW) while the demand capacity is at 400 MW.
Lucero added the firm is also managing its exposure in WESM to avoid overexposure as power rates normally go high approaching the winter season.
The Visayan Electric serves the cities of Cebu, Mandaue, Talisay, Naga and four municipalities of the greater part of Metro Cebu—Liloan, Consolacion, Minglanilla and San Fernando. (KOC)