THE Cebu City Council yesterday adopted the committee on energy’s recommendation opposing the Visayan Electric Company’s (Veco) application to charge more from customers to recover the cost of the purchase of National Transmission Corp. (Transco) assets.
“Much as we commiserate with a business enterprise’s goal of an assured and early return of its investments, a primary concern in imposing rates should be the welfare of the consumers since any increase will be an added burden to the already burdened Cebuanos,” the committee said, through a report by City Councilor Sylvan Jakosalem.
Transmission
After Veco bought Transco’s sub-transmission assets worth P179.85 million, it asked the Energy Regulatory Commission (ERC) to allow it to charge consumers an additional two centavos as “cost recovery.”
In particular, residential area consumers will be paying two centavos more on the “about P7” per kilowatt hour (kwh) that the utility firm is charging from them.
Veco will collect the amount for the next five years, once granted the authority to charge it within its franchise area.
In its application, Veco said that cost recovery is allowed under ERC Case 2007-007RC, and quoted that “the procuring distribution utility may pass on the costs attendant to the purchase, operation, and maintenance of these subtransmission lines to its customers, by filing a rate case application before the commission.”
Veco sought to recover P36,671,483 for cost, operation and maintenance, which would be spread within 4.9 years and to be collected from consumers from Liloan town in the north to San Fernando town in the south.
Maintenance
The amount was arrived at after Veco took into consideration acquisition cost— two months’ working capital requirement, and operation and maintenance.
Depreciation based on the remaining life of the assets and 12 percent return on rate or maximum allowable profit were also included in the computation.
The committee said that if ERC approves Veco’s request, the utility firm stands to collect P18.736 million a year or P91.807 million for 4.9 years.
In an interview, Jakosalem, head of the energy committee, said that it is unfair for Veco to pass acquisition cost on to the consumers when it stands to gain from the purchase.
“It is worth stressing that the remaining serviceable years of the assets extend more than a decade, which by then will already offset the acquisition cost with the expense reduction,” the committee said. (RHM)
