Wednesday, July 02, 2008 Moresco-I asks for rate hike By Mark D. Francisco
THE Misamis Oriental Electric Service Cooperative (Moresco)-I is asking for a 68-centavo increase in kilowatt hour rates, claiming that it needs P45 million to recover from its losses.
The petition has already been forwarded to the Energy and Regulatory Commission (ERC), which is set to hold a public hearing on July 8 to July 9 in the Misamis Oriental town of Laguindingan, where Moresco-I is headquartered.
In a press conference Tuesday, Moresco-I executives said their supply, metering, and distribution operations had risen because of the declining purchasing power of the peso.
"I admit that we are really losing right now," Moresco-I legal counsel Eleuterio Diao IV said.
Justifying the 68-centavo increase, Moresco-I officials said the utility is using the cash flow methodology in computing for the rate recovery formula to arrive at the 68-centavo increase per kilowatt-hour.
To arrive at the rate recovery formula, the total revenue requirement is to be divided with the total kilowatt-hours sold. The total revenue requirement of Moresco-I is P127 million, while total kilowatt hours sold is P82 million.
The last time that Moresco-I upped its unbundled rates was in 2004 when it implemented a 20-centavo increase per kilowatt-hour.
If the current trend continues, Moresco-I president Pedrito Baculio warned that they could not anymore expand serving far-flung sitios in its franchise area, which includes mountainous barangays in Cagayan de Oro City. Moresco-I is mandated to provide electricity from Lugait to El Salvador.
"Remember that the average number of households benefiting from one kilometer of electricity line is 14 households as compared to Cepalco's (Cagayan Electric Power and Light Company) 500 households for every one kilometer of electricity line. That's a lot of expenses on our part," said Moresco-I finance manager Eugene Velasco.
Moresco-I executives also need to let go of all its long-range plans that include establishing a hydropower plant in Bulanog-Batang river at Talakag, Bukidnon; buying the National Transmission Corporation (Transco) substation in Barangay Carmen, Cagayan de Oro City; and constructing an additional distribution substation to serve the Laguindingan airport.
Baculio, however, said that once all their plans would be realized, it would result to low electricity prices again.
"If we will use the hydropower plant in our day-to-day operations, we don't have to pay VAT (value-added tax) anymore because it is stipulated in our law that we don't have to pay VAT for renewable energy," Baculio explained.
Seventy percent of electricity rates currently charged by Moresco-I consumers are passed on from the National Power Corporation (Napocor) and Transco.
The remaining 30 percent is for its supply, distribution and metering system, which include VAT.
Baculio added that the construction of an additional substation to service the Laguindingan airport does not need additional financial burden from the consumers.
"Whatever income is generated from our clients at the international airport is more than enough to pay our loans in constructing the substation, including the interest," he said.
So that consumers would not be burdened with a looming 60-centavo increase per kilowatt-hour, Moresco-I executives are suggesting that residential households use compact fluorescent lamps, which use less energy than regular incandescent lamps.
They said regular incandescent lamps generate six kilowatt hours a month, while compact fluorescent lamps eat up only 1.32 kilowatt hours for the same period.
