The Energy Regulatory Commission (ERC) is due to have an initial public meeting today to discuss Energreen’s contractual relationship with the Central Negros Electric Cooperative (Ceneco). The meeting will be held at ERC’s offices in Pasig City so it is not clear whether any member-consumer from Ceneco will be able to attend.
There are several aspects which need to be discussed. The first is that Energreen has not been able to supply electricity as originally agreed with Ceneco. At its meeting of February 27, 2015, Ceneco’s Board, against the recommendation of its management, agreed to give Energreen another chance.
Energreen cited “force majeure” in relation to its inability to provide electricity to Ceneco but I am not aware of any unusual extraneous circumstances which caused Energreen not to provide electricity.
There have been subsequent discussions between members of Ceneco’s Board and Energreen, but, as far as I know, no substantive developments have been made public.
I hope the ERC will consider the cost issue. The generation charge paid by Ceneco’s consumers is around P5.8 per kilowatt hour. It was reported last November, however, that Ceneco contracted to buy 78 million kilowatt hours per annum from Energreen at a cost of P12.44 per kilowatt hour. The ERC should consider whether this is justified in the context of prevailing rates obtainable from the Wholesale Electricity Spot Market (WESM).
Next Monday, June 22, the Ceneco Board is due to elect a new set of officers. Incumbent President Arnel Lapore has signified his willingness to run for re-election as president. I have nothing against Lawyer Lapore but, in principle, I believe it is desirable if the presidency rotates amongst board members as long as there are those with the business acumen and other qualities required to discharge the responsibilities satisfactorily. I am aware that there are those who are so qualified and I hope that one of these is elected next week.
I believe the whole question of Ceneco’s bilateral contracts needs to be thoroughly and publicly discussed.
Lawyer Lapore belittles the observations expressed by former Ceneco general manager Sulplicio Lagarde relating to agreements made with Filinvest (FDC) Utilities for 20 megawtts and an additional 24 megawatts with Kepco-Salcon Power Corporation. Lagarde criticizes these agreements.
Some time ago, the ERC discussed the Kepco-Salcon agreement in which it appeared that Kepco-Salcon wanted to charge for electricity which Ceneco had contracted to buy but which was allegedly not needed. If this is true, then Lagarde has a point which needs to be publicly discussed.
Incoming Northern Negros Electric Cooperative (Noneco) president Eddie Montero has announced the joining of hands between Noneco, Ceneco and Negros Oriental Electric Cooperatives I and II to negotiate bilateral agreements with suppliers. The four cooperatives have a combined requirement of about 250 megawatts.
Full details of bilateral agreements are not always made public. In particular, in the case of the Kepco-Salcon contracts, I understand that Ceneco bears the risk if the price of coal increases. This is in contrast to the government’s policy relating to the solar feed-in tariffs which have been decreasing as the cost of producing electricity from solar energy decreases.
During Ceneco’s 40th Annual General Assembly on June 6, Lapore mentioned that Ceneco will try to reduce its systems losses, currently 14.8 percent, to 13 percent in the next six months. I hope Ceneco is successful. Its systems losses have never been higher than the current 14.8 percent. Successive Ceneco presidents have tried but failed to reduce systems losses which have been rising slowly but inexorably.
We need specifics from Ceneco as to what it proposed to do to reduce systems losses.