AN OFFICIAL of Central Negros Occidental Electric Cooperative (Ceneco) has welcomed the move of consumer group Power Watch Negros Advocates to seek a House inquiry on the alleged overpriced power contract extension between the cooperative and Kepco Salcon Power Corp. (KSPC).
Lawyer Dan Pondevilla, acting general manager and project supervisor of Ceneco, on Monday, May 31, 2021, said he sees no problem with the consumer group pushing for a Congressional inquiry as well as raising the matter to the Department of Energy (DOE).
"Mas maayo gid nga may inquiry para at least everybody can be heard [It is better to have an inquiry so at least everybody can be heard]," he added.
In a letter to Energy Secretary Eduardo Cusi dated May 29, 2021, a copy of which was obtained by SunStar Bacolod, Power Watch Negros Advocates Secretary General Wennie Sancho is asking the DOE top official to look into the matter that would have an adverse economic impact on the consumers.
Sancho told Cusi that the decision of the Ceneco Board of Directors on the “short-term extension” was made notwithstanding the fact that in the meeting on April 12 of the Competitive Selection Process (CSP) on the procurement of 20 megawatts (MW) baseload supply requirement for 2021 to 2031, there was already a lowest calculated bid of P3.2929 per kilowatt-hour (kWh) from KSPC.
“The Ceneco Board failed to act on this vital concern. Instead, they opted to close this short-term extension at the price of P5.42 to P5.58 per kWh,” he added.
The group is also keen on bringing the issue up to the national government particularly at the House of Representatives.
Sancho said they are tapping the help of Negrense congressmen mainly Negros Occidental Third District Representative Francisco “Kiko” Benitez to push for a congressional inquiry regarding the alleged overpriced power deal between Ceneco and KSPC.
“We will push for the congressional inquiry after the DOE can respond to the concern we raised,” he said, adding that “we are now talking of the price of electricity in general which will affect all sectors -- business and consumers -- and so it is just proper that our legislators should know what is going on.”
Ceneco caters to the largest number of electric consumers in the province including those in cities of Bacolod, Bago, Talisay and Silay, and towns of Murcia and Salvador Benedicto.
On May 26, Pondevilla confirmed that the power distribution utility accepted the earlier offer of KSPC for a one-year extension of their power contract.
Pondevilla, however, said the extension should be at a reduced capacity of 20 MW or half of the 40 MW that was previously contracted by Ceneco with the KSPC for 10 years.
“This is the most practical and beneficial on the part of the consumers. Contracting just 20 MW, and not 40 MW, will enable us to maximize our supply and reduce our power rates,” he said, reiterating that based on the utility’s power supply plan “what we need is just 20 MW.”
He earlier stressed that there was no overcontracting on the extension of power sales contract with the Cebu-based coal-fired power plant.
As to the overpricing claims of Power Watch, the Ceneco official said "[there was] no overpricing primarily because all rates were approved by the Energy Regulatory Commission (ERC)."
According to Ceneco's Corporate Planning Division, the extended contract cost is similar to that of the existing power supply agreement with the power generation utility.
If based only on KSPC's power cost of P5.58 per kWh inclusive of value-added tax (VAT) for May 2021, the cost of the one-year power contract extension would be about P977.6 million.
Its division manager Engineer Norman Pollentes, however, said the price may vary depending on several factors like consumer’s price index, foreign exchange rate and fuel cost fluctuations.
In April this year, the power cost of KSPC was P5.27 per kWh.
Sancho, in his letter to the DOE furnished to President Complaint Center Director Jaime Llaguno Mabilin, said they cannot understand the logic as to why the Ceneco Board and management decided to accept a power supply agreement with a price higher than what was previously bid.
The consumer group leader said the difference of P2.13 or P2.29 would result in millions of pesos if multiplied by the volume per kWh and this will be a financial burden for all Ceneco consumers amid the pandemic.
Based on Power Watch’s calculation, the price difference of P2.13 per kWh, for instance, if multiplied by 14,400,000 kWh or equivalent to 20 MW, is equaled to P30,643,200 a month totaling to at least P367.7 million for one year.
“Ceneco should have chosen the just and reasonable price that would lower the cost of payments for our monthly electric bills,” he said, adding that “unfortunately, we believe that the Ceneco Board who approved this power supply agreement failed to protect the welfare of the consumers whom they had sworn to serve.”
Arguing to this, Ceneco president Jojit Yap, in a phone interview with SunStar Bacolod last week, said there was no overpricing as the cost was still based on the existing contract with KSPC.
Yap recalled that there was a protest from another group, Konsyumer-Negros, particularly on the terms and reference of the power supply agreement which the cooperative was about to enter with the power generation utility.
“Though there was already a bidding, the Board acted to the concern raised by Konsyumer-Negros by forwarding it to the DOE,” she said, adding that though the agency has acknowledged the receipt of the concern, it has yet to answer on the matter.
The Ceneco president explained that they opted to push through with the extended contract with KSPC because it will already expire pending the decision of the DOE on the query of the consumer group.
“We cannot just rely on the Wholesale Electricity Spot Market (Wesm) as the cost of power there goes up and down,” she added.
Yap said they looked for other suppliers as options who can provide for a lower rate but only for a 20-MW supply.
She said the Ceneco Board asked the KSPC if the lowest calculated bid of P3.2929 per kWh can be applied for the 20-MW power contract. The firm, however, did not agree on it.
“We were left with no other options but with KSPC which Ceneco has an existing contract approved by the ERC,” she added.