Ceneco dismisses revived overcontracting allegations

BACOLOD. Power Watch Negros Secretary General Wennie Sancho (second from left) with Ceneco officials led by officer-in-charge general manager engineer Jose Taniongon (right) and corporate planning division manager engineer Norman Pollentes (second from right) during a dialogue at the Northwest Inn in Bacolod City Wednesday, December 18, 2019. (Photo by Erwin P. Nicavera)

THERE seems to be a revival and resurrection of the overcontracting allegation against the Central Negros Electric Cooperative (Ceneco), a power distribution utility catering to the largest number of electric consumers in the province.

Power Watch Negros secretary general Wennie Sancho, in a dialogue with some officials of the electric cooperative at the Northwest Inn in Bacolod City Wednesday, December 18, again raised the consumer group’s concern on the alleged overcontracting among power supply agreements (PSAs) entered by Ceneco with some power generators.

In a position paper read during the dialogue, Sancho said the Energy Regulatory Commission (ERC) established that from July 29, 2011 to November 25, 2013, Ceneco contracted 59,710,493-kilowatt hour (kWh) equivalent to about P232 million in excess of its actual requirement.

The position paper stated that for the interim period of 18 months, from December 26, 2014 to June 25, 2016, out of 262,800,000 contracted energy, only 139,284,000 kWh or 53 percent was utilized by the cooperative.

Hence, the ERC opened that Kepco Salcon Power Corp. (KSPC) must be compensated by allowing the recovery of P232 million cost to maintain its financial viability, it added.

Sancho claimed that the adverse financial effect of overcontracted power deals passed on to the shoulders of member-consumers have reached to P547 million.

Of the figures, P232 million is with the KSPC while the remaining P315 million is with Filinvest Development Corp. Utilities Inc. (FDCUI).

The consumers, he said, will cough up more in the event the ERC approves FDCUI’s differential billing amounting to P146.7 million.

Also, he claimed that the financial loss of P378 million for the 20-megawatt power agreement with FDCUI may have already been passed on to the consumers while the P146.7 million differential recovery is still pending with the ERC.

“If we shall not expose and oppose overcontracting syndicate scheme by enterprising and devious individuals, the member-consumers will not only be shackled by the tremendous financial burden,” Sancho said, adding that “our rights as consumers were also blatantly violated by unscrupulous individuals who pretend to be protectors of consumers’ interest but are in fact are wolves in sheep’s clothing.”

The dialogue was an offshoot of the letter-request of Power Watch Negros to Ceneco president Dwight Carbon dated December 9, 2019.

For the consumer group, the purpose of the talk is to resurrect the issue of overcontracting “which is very alarming” for all consumers.

The Ceneco management, though, maintained that there was no overcontracting on the PSAs it has entered with power generation utilities.

Its corporate planning division manager engineer Norman Pollentes, who was also at the dialogue, said all power contracts entered by Ceneco will not be implemented if not approved by the ERC.

Pollentes said if there are moves to question the contract, it is now subject to the authority and credibility of the regulatory commission.

However, it should not prevent consumers to raise their concerns at the cooperative level provided it should be done during the time when the application is being filed.

“Once these are already entered contracts, the venue should be the ERC which, under the Electric Power Industry Reform Act (Epira), has the sole authority for all issues raised against power industry,” he said.

As the cooperative dismisses the overcontracting allegation, Pollentes pointed out that the decisions by the Board of Directors (BOD) in the past were based on various considerations.

He said that if the cooperative is contracting for 10 years, it has to consider a lot of economic factors thus, the forecast demand is being reviewed in order to arrive for what is optimal or most economical, reliable and quality.

“Reliability is an additional factor that we considered in power supply contracting,” he said, adding that “we cannot afford to contract cheaper power supply but not reliable.”

There’s no overcontracting, Pollentes stressed, assuring that there can be no overcontracting especially with the future PSAs as the cooperative will start entering power contracts through competitive selection process (CSP).

When the Epira Law started in 2010, the method of procurement was made through supply negotiation by solicitation of competitive offers from different power generators.

All Ceneco’s supply agreement will be through CSP framework already starting next year.

For Sancho, they respect the stand of Ceneco but for Power Watch “there’s really an overcontracting as proven in the case of KSPC.”

The consumer group leader, though, expressed optimism that the dialogue would spark more discussions between the cooperative and consumers in order to educate the latter and uphold transparency at the utility.

“Our intention is to get the cooperation of a people-management Board of Directors to prevent possible overcontracting in the future,” he added.


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