ERC public hearing – The details-A A +A
An Independent View
Monday, October 28, 2013
EARLY last week, I wrote an article entitled “ERC Public Hearing.” This hearing took place, as scheduled, last Thursday, October 24.
As I mentioned in my article, Ceneco entered into a contract with Kepco SPC Power Corporation in July 2011 for 24 MW. This, combined with other contracts that Ceneco has made, means that Ceneco has contracted to purchase more electricity than its customers are consuming.
What to do?
Easy, says Ceneco. The customer can pay for the electricity Ceneco contracted to buy but the customer is not using.
The logic of this escapes Atty. Vicente Petierre III, who demurred on behalf of the Bacolod Sanggunian and the rest of us. He correctly says the July 2011 contract is very disadvantageous to Ceneco’s consumers. We agree. An average penalty approaching P10M per month is indeed very disadvantageous. Not unadjacent to P100 per consumer per month.
Bayan Muna provincial coordinator Alejandro Deoma concurred with Atty. Petierre III.
Ceneco’s reported response was inadequate and irrelevant. General Manager Sulpicio Lagarde Jr said that Ceneco needs to get additional power supply because, based on its forecast, it will need 200 MW in 2016. He needs a new crystal ball. At current and future prices we cannot afford to buy 200 MW. I hope Ceneco’s forecasting model takes into account that high prices dampen demand.
Ceneco should not be signing watertight contracts in 2011 on the basis of its guesstimates of our 2016 requirements.
It just is not necessary.
Lagarde was also off-point when he spoke of other contracts such as the contract for the delivery up to 2016 of 15 MW from Panay.
The only topic that needed to be discussed was the overbuying inherent in the July 2011 contract with Kepco.
Last week’s bearing was presided by Energy Regulatory Commission hearing officer Rhett Mislang as a result of the joint application of Ceneco and KSPC.
We do not consider that Ceneco’s customers should be penalized for the disadvantageous July 2011 contract.
We believe that ERC should recognize the cogent arguments put forward by Atty. Petierre III and deny the joint request of Ceneco and KSPC.
Any subsequent contractual problems are between Ceneco and KSPC. An important issue is that electricity is not wasted. KSPC generates electricity according to demand. The contracted penalty costs are excessive because KSPC has not incurred losses.
Published in the Sun.Star Bacolod newspaper on October 28, 2013.