Tuesday, May 20, 2008 Veco, Davao Light to seek power rate hike
ABOITIZ Power Corp. (AP) hopes to increase rates of its distribution utilities like the Visayan Electric Co. (Veco) and Davao Light and Power Co.
This would mean an increase in the distribution charges included in the monthly electric bill, which is imposed on consumers.
AP president and chief executive officer Erramon Aboitiz assured that the adjustment will not be implemented right away, as the company will still apply with the Energy Regulatory Commission (ERC) and have its utilities undergo a long process called performance-based regulation (PBR) that includes a series of public hearings, among others.
“If we start with Veco by the end of the year, and considering it would take 18 to 24 months to be completed, nothing will probably happen until 2010,” he said.
Aboitiz added that it is still too early to tell how much its proposed rates would be.
Based on 2000
During the AP’s first annual shareholders’ meeting yesterday as a publicly listed company, he said the company is confident that its distribution rates will be adjusted, with ERC’s implementation of PBR and considering that its current rates are based on assets and expenses of the year 2000.
“We have higher expenses. Salaries have gone up. Cost of operations has gone up, as well as our capital expenditures and prices of materials like wires, transformers and steel. Costs have gone up.
“We think that after eight years, there probably should be an adjustment. But it’s still a little early to tell how much exactly and to what extent,” Aboitiz said.
AP executive vice president for strategy and regulatory affairs Juan Antonio Bernad said there will be a schedule for the conduct of PBR in all its utilities.
“The first utilities to go through this process were Cagayan de Oro, Meralco, and Dagupan Electric. The first batch is a little delayed. They were supposed to have the performance-based rating in 2007. But they already had their public hearings. The second batch will include Cotabato and Iligan and I think, Mactan. Veco will be under the third batch,” he said.
Hearings
The process will include public hearings and participation of consultants and appraisers, both foreign and local, who will look at not just its proposed rates but also the level of quality service it can offer.
“Part of the process is that we are expected to have certain obligations to meet. One is how to reduce system losses and how quickly is the response time in terms of connections and reconnections,” he added. (NRC)
