THE Cebu Chamber of Commerce and Industry (CCCI) has requested the Regional Development Council (RDC) 7 to follow up on the Energy Regulatory Council’s (ERC) findings on Cebu’s high power rates.
Raised by RDC 7 Economic Development Committee (EDC) chairman Consul Virgilio Espeleta during the council’s 4th quarter meeting, Friday, Dec. 3, 2021, CCCI wrote to RDC 7 chairman Kenneth Cobonpue on Wednesday, Dec. 1, requesting for a follow-up on ERC’s findings on the factors affecting the cost of electricity in Cebu.
“May we respectfully request the RDC 7 to entreat the ERC to respond formally to the queries raised by CCCI in the past including why Cebu has the highest cost of power in the country and providing us the results of their evaluation... This will provide us a glimpse of where our country’s energy regulatory agency stands in its mandate to serve the best interests of the power consumers and at the very least from the point of view of transparency in the power industry,” the CCCI said in its letter.
The chamber noted that on Jan. 27, an article published in BusinessWorld entitled “ERC readies report on Visayan Electric’s alleged high power rates” authored by Angelica Yang, contains ERC commissioner-in-charge Floresinda Baldo-Digal’s statement that the commission is set to complete its evaluation by February 2021.
“If indeed the ERC has completed its evaluation since then, the CCCI has not received a copy of this,” the chamber said.
The chamber said it wants the ERC to respond, produce facts and analysis, and address the very issue of Cebu’s high power cost relative to the rest of the country and the region.
“It has been almost a year since CCCI raised these and we respectfully need answers to all the queries we have raised to ERC especially on why Cebu has the highest cost of power in the Philippines in our steadfast belief that good governance requires the mandated government entities to be responsible and accountable to its citizenry —the business community included,” the chamber said.
CCCI said it brought up during the RDC 7’s EDC meeting early this November that “it has taken painstaking effort to become an active intervenor in the ERC hearings on the Veco Application for the Confirmation and Approval of over/under recoveries for the years 2018 to 2020 which if granted, will yet increase further the cost of power in Cebu.”
“In the course of our investigation, we came across what CCCI had long suspected that one of the power suppliers was actually operating without an approved power supply agreement which the ERC chairperson and chief executive officer Agnes VST Devanadera confirmed in a letter to CCCI. Moreover, we had brought to their attention the violation of the Epira which prohibits the sourcing of more than 50 percent of its total power demand from affiliate firms engaged in generation,” the chamber said.
Answers
CCCI specifically wants answers from ERC on the following issues: “(1) what happens to all charges that Veco imposed on its consumers since 2013, i.e., will these result to refunds and (2) what actions does ERC take on violators of the Electric Power Industry Reform Act (Epira) Law that has gone on for several years now, i.e., will these result to cancellation or cessation of power supply agreements? And finally, will this impact the high cost of power in Cebu?”
Early this year, the ERC ordered the Visayan Electric Company to submit an explanation over its alleged high power rates.
In a letter dated Jan. 4, Devanadera directed Visayan Electric to submit an explanation regarding the high electricity rates charged by it and its perceived violation of Section 45 (b) of the Epira Law.
Section 23 of the Epira mandates that distribution utilities, Visayan Electric included, have the obligation to supply electricity in the least cost manner to its captive market, subject to the collection of retail rate duly approved by the ERC.
Based on the available records of the ERC, Veco sources its power requirements from its independent power producers, namely: Cebu Private Power Corp. (CPPC), Green Core Geothermal Inc. (GCGI), Cebu Energy Development Corp. (CEDC) and Therma Visayas Inc. (TVI).
For the billing periods of January to October 2020, Visayan Electric’s power purchased from CPPC, TVI and CEDC was equivalent to 65.18 percent of its total power requirement.
Termination of contracts
Earlier, Visayan Electric said it terminated three contracts from its power suppliers in a bid to reduce the power rates in its franchise area.
Power supply contracts of the Aboitiz Energy Solutions Inc. and Vivant Energy Corp. were both terminated in October 2019 while the contract with the CPPC was discontinued in August 2021. The power distribution utility firm now gets power supply from CEDC, TVI and GCGI.
Visayan Electric’s initiative to reevaluate and renegotiate some of its long-term power contracts was triggered by the call of the business and consumer groups to address the high power rates in Cebu.