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Thursday, November 24, 2005
Power shortage in Cebu looms
UNLESS Cebu’s largest power distributor and its supplier come to terms tomorrow, low-voltage problems and rotating brownouts could plague Cebu as it hosts the 23rd Southeast Asian Games and prepares for the holidays.
The Cebu Private Power Corp. (CPPC) will stop delivering electricity to the Visayan Electric Company Inc. (Veco) “at exactly 12:01 a.m. on Nov. 26, 2005,” the CPPC said in a letter to the Cebu City Council.
CPPC blamed Veco’s alleged refusal to extend their interim agreement that, since 2003, allowed CPPC to charge higher rates for its supply.
After two extensions, that agreement expires today.
CPPC’s letter alarmed the City Council and prompted members in yesterday’s regular session to call officials of Veco and CPPC to an executive session tomorrow. They also invited the Energy Regulatory Commission (ERC) and the Cebu City Chamber of Commerce and Industry.
Veco, in a press statement, said it has “never shut its doors to negotiations” with CPPC, but added that the independent power producer’s proposed rates are “unacceptable, high and grossly disadvantageous” to Veco’s customers.
Round two
Two years ago, CPPC also threatened to stop supplying power to Veco, saying it had suffered huge losses.
Under their original power supply agreement, CPPC can only charge Veco two percent less than what the state-owned National Power Corp. (NPC) collects per kilowatt-hour (kwh).
“CPPC agreed to take the fuel, foreign exchange and operational risks,” Veco said in yesterday’s statement.
Since 2003, however, NPC’s rates have increased. As of April this year, NPC’s selling rate was already P1.035 higher per kwh than what it was when the Veco-CPPC price dispute first erupted.
Veco distributes power to some 225,000 households and over 22,000 businesses in Metro Cebu. It gets about 23 percent of its daily supply from CPPC.
Power play
In a privilege speech, Cebu City Councilor Nestor Archival urged Veco and CPPC to “renegotiate their power purchase agreement (PPA),” as recommended by ERC.
The ERC is no longer willing to extend the interim pricing agreement for a third time.
To assuage fears of a power shortage beginning on Saturday, CPPC general manager Rogelio Lim said the suspension of its operations “would not affect stability, reliability and adequacy of electric power supply to Cebu City.”
He cited the “recently-completed Leyte-Cebu uprating project, combined with the efficient operation of the existing NPC and other IPP generating facilities in the (Cebu-Negros-Panay) grid.”
But Councilor Sylvan Jakosalem, chairman of the council committee on energy, said he talked to a high Veco official and learned that low voltage problems are “sure to happen” once CPPC stops supplying 62 megawatts of power daily to Veco.
‘Critical’
Veco, he was told, might resort to rotating brownouts to cope with the demand for power, which is expected to rise in December.
“I believe this is critical. It will bring back power in Cebu City to a critical level, especially that it is the holiday season,” he said.
Jakosalem added, though, that the Veco official assured him that the distributor will ensure uninterrupted power supply for SEA Games venues and hotels where the athletes and guests are billeted.
CPPC assured that it will be ready to resume its supply to Veco once the situation is sorted out.
“We plan to remain available to Veco so that anytime a mutually beneficial agreement is signed or the dispute is resolved, whichever occurs earlier, we can restart operations as quickly as possible,” Lim said.
The ERC earlier told both Veco and CPPC to negotiate another extension of their price agreement, but Lim said in his letter that Veco refused.
Veco, however, denied this in its statement, pointing out that Veco and CPPC officials “have on several occasions met to discuss the matter.”
Veco also urged CPPC to stick to the terms of its original power supply agreement.
“To change the terms is not only a violation of the original contract, but clearly shows an insensitivity to the needs of Veco’s consumers already saddled with economic burdens,” the power distributor’s statement added. (RHM)
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