WITH the current issue between Central Negros Electric Cooperative (Ceneco) and Kepco Salcon Power Corp. (KSPC), the power supply in the areas being serviced by the power distribution utility will not be affected.
This was the assurance of Ceneco president Jojit Yap as KSPC sent a demand letter on January 14, 2022, asking the cooperative to settle their supposed financial obligation with the generation utility based on the extended contract in the amount of about P280 million within 15 days.
Yap, in a virtual forum Thursday, January 20, said that should negotiations between Ceneco and KSPC fail, the electricity firm can contract with other suppliers or source out power through the Wholesale Electricity Stock Market (Wesm).
The problem, however, she said, is that the power cost being offered by Wesm is volatile, which means it may affect Ceneco’s power rates.
Nonetheless, there are other power suppliers that can offer Ceneco a power supply if KSPC decides to terminate its contract with the cooperative, she added.
Engineer Norman Pollentes, who heads the corporate and planning department of Ceneco, said the distribution utility is willing to settle its financial obligation with KSPC.
Only that, they will pay the P3.60 per kilowatt hour (kWh) as time of use (TOU), which was approved by the Energy Regulatory Commission (ERC) instead of the P5.44 per kWh stipulated in their extended contract with KPSC for the 20-megawatt (MW) base load supply.
“We don’t have any debt because the extended contract was not approved by the ERC,” Ceneco acting general manager Engineer Jose Taniongon said, adding that “if the ERC rules in favor of KSPC then that’s the time we could consider it as a debt which we will pay.”
“But if the agency rules in our favor then we don’t owe them anything,” the acting manager stressed.
In 2021, Ceneco decided to extend its 10-year contract with KSPC for another year but instead of the 40 MW base load supply, the cooperative opted to reduce it to 20 MW since this is the “right amount” of power it needed.
This, after the competitive selection process in April 2021, where KSPC won the rights to supply Ceneco power for another 10 years, was halted following the complaint filed by Konsyumer Negros, an electricity consumers’ group, before the Department of Energy (DOE).
To temporarily address the issue, president and chief executive officer Jong Ryon Yoon of Kepco-SPC, in a letter to then general manager Danny Pondevilla, asked for a year extension of their existing contract.
Yoon said the firm gave a significant performance in delivering secure, reliable, and affordable supply, for the last 10 years.
He also assured that the extension of the contract shall be under similar terms and conditions as their current one, and will be beneficial to Ceneco and its member-consumers.
Power Watch Negros Association, however, filed an opposition against the extension of the power deal, and called it “over contracting and detrimental, with a danger of economic repercussion” before the ERC.
The ERC in October 2021 ruled that it is yet to approve the extension of the contract between Ceneco and KPSC.
With that, Pollentes reiterated that Ceneco cannot pay the differential amount being asked by KSPC and can only pay the P3.6 per kWh.
He said they already informed KSPC of this regulatory setback, but unfortunately, the power supplier insisted that Ceneco should pay the amount as stipulated in their extended contract.
Aside from the 20-MW contract that is currently the subject of controversy, Ceneco has another contract with KSPC for the delivery of 24-MW power supply, which is also due to expire in May this year.
Asked if the issue will affect this other contract, Pollentes said, “we will cross the bridge when we get there.”
Aside from KSPC, other contracts entered into by Ceneco included the 20 MW with Green Core Geothermal Inc. in Negros Oriental until 2025, and 35 MW from Palm Concepcion Power Corp. in Iloilo, that will end in 2025.
For its peaking load, the firm contracted 18.9 MW from the Central Negros Power Reliability Inc., formerly Energreen Power Development and Management Corp., based in Bago City, Negros Occidental, until 2032.
For his part, Wennie Sancho, secretary general of Power Watch Negros, said they will file administrative charges against Ceneco officials because of this controversy saying that it will affect the member-consumers.
Sancho said this issue arose from the mismanagement of the firm’s officials.
Ceneco is the largest electric cooperative in Negros Occidental supplying electricity to the highly urbanized city of Bacolod, as well as the neighboring cities of Talisay, Silay and Bago and the towns of Don Salvador Benedicto and Murcia.