DAVAO City Council unanimously approved Tuesday a resolution opposing a proposed power rate increase by the Davao Light and Power Company (DLPC).

Executives of the DLPC explained to the council the reason for the rate increase and clarified misinterpretation of previous talks. The City Council, however, "objected to (DLPC's) rate increase."

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Councilors expressed their displeasure that public hearings have been conducted regarding the power firm’s application without the knowledge of the council.

Councilor Danilo Dayanghirang criticized Energy Regulatory Commission (ERC) in Mindanao, which holds office in the city, for failing "to protect the interest of the public by ensuring the application undergoes due process."

"There was a public hearing conducted in January 20 but it was attended by 30. Thirty people do not represent the entire population of the city, which is almost 1.5 million," Dayanghirang said.

DLPC's Bien Garcia, vice president for Administration and Customer Services Group, said DLPC as of now cannot determine the increase.

"As of today, a draft determination has been issued where the ERC has provided indicative maximum prices for the regulatory years 2011 to 2014. On March 10, DPLC expects to receive the Final Determination which will allow DLPC to design its rates. On April 1, DLPC will submit its rate design to ERC. DLPC will then be in the position to explain to the public the increase. What the ERC will approve will be effective on July 1, 2010," Garcia said.

Garcia also said although DLPC is now complying with a schedule set by the ERC, DLPC's drafted rates after March 10 won't be final.

"It won't be written in stone. There is a possibility to defer the price on the next years. We do not negotiate but we will justify that rate," Garcia said.

Meanwhile, an intervenor during the hearings conducted by the ERC, National Association of Electricity Consumers for Reforms Inc. (Nasecor)-Davao chair Myrna Valdez said Wednesday blaming DLPC would be "barking at the wrong tree."

Valdez said a bigger problem exists for the city as the National Grid Corp. of the Philippines's (NGCP) recently filed a petition for a power rate increases to ERC.

"NGCP has something to do with the increases. DLPC is just one factor not the main problem (for the city). I haven't looked into this one the PBR-side because I'm only concentrating now on NGCP's transmission, it's costing," Valdez said in an interview during Club 888 at Marco Polo Hotel.

"If NGCP will increase [its] transmission rates, [it] will slap it to the distribution utilities (DU) like DLPC. Then DLPC would have no choice but to increase their rates," Valdez said.

Valdez said she is "not defending" DLPC but it has "performed well for the interest of the public."

"We should be thankful DLPC has a back-up generator. We are actually not suffering (from power outages) as much as those in Luzon," Valdez said.

In DLPC's report on Tuesday's session, Garcia said DLPC had passed an application in compliance to the new rate-determining method mandated by the Energy Regulatory Commission.

"It's a mistaken belief that we actually applied for a rate increase. We did not apply for a rate increase. Our application was for our annual revenue requirement and the performance incentive scheme," Garcia said.

He also said ERC mandated all DU to go under the Rules for Setting Distribution Wheeling Rates (RDWR) that now prescribe a new method of setting rates called Performance-Based Regulation (PBR).

"The PBR will now be the new methodology to be used in determining annual revenue and performance standard for a DU like DLPC. The performance standards are set under the Performance Incentive Scheme (PIS)," Garcia said.

He reasoned that DLPC hasn't increased rates since 2000. "DLPC's last increase in 2004 was based on its assets as of 2000. There were increases in its operating and maintenance expenses 2000. The resulting annual revenue requirement will result to the annual rate increase."

DLPC, like any business, is entitled to an increase, Garcia said.

DLPC Executive Vice President Manuel Orig, however, gave assurance that rates will remain fair. "We would like to clarify that whatever rate DLPC will implement it will still be enough for operators to (function as it does)." (JCZ)