Thursday, March 01, 2007 ERC order seen to affect Veco’s petition for increase
IN ITSELF, the order for the National Power Corp. (Napocor) to cut its rates by 31.5 centavos per kilowatt-hour (kwh) in the Visayas should bring down electricity bills for households and businesses.
More than that, however, the reduction is also a good argument for those opposing a petition for rate increase filed by the Visayan Electric Company Inc. (Veco), said lawyer Michael Enriquez, chairman of the Freedom from Debt Coalition in Cebu.
Veco’s petition for higher rates is scheduled for a public hearing by the Energy Regulatory Commission (ERC) on March 9.
For now, Veco has yet to determine how much its rates will be affected, because the ERC decision to cut Napocor’s rates will take effect in the February-March 2007 billing period yet.
Veco also has to wait for the bills from its other power suppliers, like the Cebu Private Power Corp. (CPPC) and Toledo Power Corp., said Veco spokesperson Ethel Natera.
“Remember that we don’t get 100 percent power from Napocor,” said Natera. Veco will get its February-March bill from Napocor in the first week of April yet, she added.
Big help
Yet even without Veco’s figures, the reduction of Napocor rates was already welcome news for Cebu’s business leaders.
It will help the export sector, especially furniture makers whose production costs will go down, said Mandaue Chamber of Commerce and Industry president Eric Ng Mendoza.
Mendoza said it is sad that power rates in the Philippines are among the highest in Asia, which is one reason the manufacturing sector is struggling.
According to a notice on its website, the ERC said the public has been expecting lower rates as the peso continues to strengthen against the US dollar.
“Any reduction is of help to both big and small businesses. It’s a welcome move,” said Robert Go, past president of the Cebu Chamber of Commerce and Industry.
He expects the power rate reduction to help the manufacturing, retail and entertainment sectors, which heavily use power.
Systems loss
Roger Lim of the CPPC, which also supplies power to Veco, said that while the Napocor reduction is 31 centavos per kwh, Veco’s consumers won’t necessarily get the same rate adjustment.
Apart from Napocor’s rate reduction, another aspect of Veco’s operations and its effect on consumer bills was also taken up yesterday.
The Cebu City Council will transmit to the ERC the transcript of yesterday’s public hearing on Veco’s application for the approval of systems loss caps.
The request, pending before the ERC, sets how much of its systems losses Veco can recover from consumers.
In the public hearing, councilors expressed their concerns over the application, among them the question of why Veco should pass on their systems losses to consumers.
Councilor Gerardo Carillo also said they cannot make an objective comment on whether they will agree with the application, because they are unsure that the data Veco presented are true.
Under ERC guidelines, systems losses in excess of the caps cannot be passed on to consumers.
Projections
Veco vice president for engineering Raul Lucero told the council that the company’s average systems loss is 10.22 percent of the power it buys from the Napocor.
The figure is based on the 2004 test for segregated distribution system losses.
The wasted energy is broken down into administrative loss (power used for Veco offices, buildings), 0.17 percent; technical loss (energy lost in the transmission of power from Napocor, to Veco, to consumers), 7.46 percent; and non-technical loss (pilferage, illegal tapping), 2.59 percent.
In a six-page petition, Veco proposes to recover 2,748,015 kwh in administrative losses in 2005; 2,914,425 kwh in 2006; 3,031,002 kwh this year; 3,152,242 kwh in 2008; and 3,278,331 kwh in 2009.
Lucero said the projected systems losses takes into account greater demand as Cebu’s economy grows.
Overhead
Veco distributes power to three Cebu cities and six towns.
Veco asked the ERC to issue a provisional authority for it to implement the proposed caps and make it permanent.
But Vice Mayor Michael Rama said yesterday there is a need for the ERC to review the law. Councilor Rodrigo Abellanosa point-ed out that Veco, instead of treating its losses as overhead expenses, charges them to the consumers.
Lawyer Joel Bontuyan of ERC Visayas assured Rama that he will bring their concerns to their national office.
He also said the Joint Congressional Power Commission is gathering comments and suggestions regarding Republic Act 9136, or the Electric Power Industry Reform Act of 2004. (EOB/RHM)
