BY ERWIN ‘AMBO’ DELILAN
THE EVER-controversial Central Negros Electric Cooperative (Ceneco) is currently facing a “superstorm”.
Ceneco, on Jan. 14, 2022, received a “Notice of Default” from KEPCO SPC Power Corporation.
KEPCO was demanding Ceneco to pay its current outstanding financial obligation amounting to P280,298,294.20 within 15 days upon receipt of notice.
But Ceneco, in a statement released to the media on Thursday, said it can’t pay yet.
Why? What happened and what hinders Ceneco to pay KEPCO with this huge amount of payable? Quite intriguing!
Let’s dissect and simplify the issue.
KEPCO and Ceneco have an existing one-year Power Supply Agreement (PSA) for 20 megawatts (MW). It commenced in May 2021. It’s an extended pact after the previous KEPCO-Ceneco 10-year power deal expired in April last year.
However, such extended contract became controversial after consumers’ watchdog – Power Watch Negros Advocates, Inc. (Power Watch), among other progressive groups – questioned the validity of it.
Power Watch’s contention: Ceneco didn’t follow the pricing indicated in the approved Competitive Selection Process (CSP) of the coop’s Third Party Bids and Awards Committee (TPBAC).
Ceneco TPBAC’s CSP only approved the P3.79/kilowatt (kWh) as price cap for an extended PSA with any power generator.
But during the actual bidding with five generator-bidders, the public was shocked when KEPCO won at P5.42/kWh bid price.
Power Watch, therefore, went to the Energy Regulatory Commission (ERC) and Department of Energy (DOE) to challenge this extended PSA.
Both the ERC and DOE ordered Ceneco to go back to CSP.
KEPCO-Ceneco’s extended PSA, therefore, became an interim pact until the issue on CSP is resolved.
As a result, Ceneco can’t pass-on the questionable rate to the consumers sans final approval from the ERC.
CSP is vital in (any) PSA. It serves as the Bible of all distribution utilities (DUs) in the country in dwelling with their PSAs.
INELIGIBLE PACT
The Supreme Court (SC) had already a final ruling on it. All PSAs from June 30, 2015 and beyond, declared by the High Court, must undergo CSP.
Sample jurisprudence for this SC ruling was the case of Alyansa Para sa Bagong Pilipinas (Alyansa) vs. ERC, Meralco, et al. In 2016, Alyansa filed a petition with the SC against ERC’s decision to suspend Meralco’s CSP in buying power supply from various generating companies (Gencos).
After three years of legal intramurals, the SC, in its May 3, 2019 decision, ruled in favor of the Alyansa. Retired associate justice Antonio Carpio, the ponente in the case, penned this very precious comment: “The outcome of this case will greatly affect, for the next two decades, all consumers of electricity in the Philippines, which include the over 95 million Filipinos as well as millions of business enterprises operating in the Philippines.”
He specifically cited Section 19, Article XII of the 1987 Constitution, which provides, “The State shall regulate or prohibit monopolies when the public interest so requires. No combination in restraint of trade or unfair competition shall be allowed.”
Hence, the ruling was clear enough for DUs to understand the essence of CSP in PSAs.
But prior to the SC ruling on CSP in 2019, both the ERC and DOE have already existing resolution and circular on CSP.
ERC Resolution No. 13, series of 2015 compels all DUs to conduct CSP in the procurement of their power supply to the captive market.
DOE Department Circular Number DC-2018-02003, on the other hand, requires all DUs’ TPBAC to invite observers, including representative (s) from the ERC during the bidding.
Thus, the SC ruling, ERC resolution and DOE circular on CSP were used by Power Watch as legal basis in its plangent objection against this KEPCO-Ceneco extended PSA.
And while the said pact remains “ineligible” still, per the ERC previous finding, the coop is currently paying KEPCO using the universally approved National Power Corporation (Napocor) rate termed as Time Obvious Rate (TOU) at P3.70/kWh.
So, between the contracted price of P5.42/kWh and TOU of P3.70/kWh, there’s this price difference of P1.72/kWh in this KEPCO-Ceneco extended PSA.
For six months (May-November 2021), this P1.72/kWh summed up to P280,298,294.20.
KEPCO termed such payable as Differential Billing (DB).
If Ceneco can’t pay this, it’ll be doubled and the end of the contract in May.
Ceneco, therefore, stands to pay KEPCO a total of P560,596,588.40.
It’s a huge amount, therefore.
Question: Who’ll pay for it?
FIRST OF ITS KIND
Though court cases and controversies aren’t new to Ceneco, yet the current one is really the first of its kind. Because there’s an ingredient of “blatant” disregard of the CSP, thus, tantamount to “disrespect” of the High Tribunal’s ruling.
Now, what’s alarming is if Ceneco can’t pay KEPCO within these days. KEPCO may either suspend the delivery of power or go to court and file necessary charges against Ceneco.
Will it mean power shortage leading to power blackouts in Bacolod, among other Ceneco’s areas of coverage?
But Ceneco president Jojit Yap was quick to say that they’re ready now to succumb to buying power from the Wholesale Electricity Spot Market (WESM) even at a higher price.
Good idea aimed at saving consumers from imminent blackouts.
But then again, the consuming public will burden the inflated price of power from WESM.
KEPCO, on the other hand, won’t just sit down and relax.
Based on my experience in the power industry for more than nine years, I am pretty sure KEPCO will go to a regular court in Bacolod and file appropriate charge(s) against Ceneco.
If this happens, KEPCO will make the court as its collecting agent for its DB with Ceneco.
Ceneco’s line of defense for sure: Wait for ERC’s final order.
But ERC can no longer go against the SC ruling on CSP.
So, if worse comes to worst, the question is: Who will pay this more than P500-M payable?
POWERLESS VS POWERFUL= TROUBLE
Power Watch is now on alert 24/7. Its secretary-general, Wennie Sancho, in a press conference on Thursday already alerted the public about this KEPCO’s Notice of Default.
Power Watch won’t allow Ceneco’s member-consumer-owners (MCOs) to burden such huge amount just in case.
And Sancho, alongside other progressive groups, vowed to exhaust all possible legal means to protect their fellow MCOs.
Well, in my humble analysis, the moral of the story is all about respect. Those “powerful” should never undermine the “powerless”. Instead, the powerful must lend an ear to listen and a heart to feel the powerless.
In the present case, Power Watch is the powerless and Ceneco is the powerful.
At the start of the confusion, Power Watch already raised legitimate insights to, somehow, correct the process, but Ceneco executives ignored it. Now comes the mess and, if this can’t be handled well, could lead to a financial debacle on the part of Ceneco – hard to bear anymore.
Of course, my heart goes to the consumers. Just in case this more than P500-M payable will be passed-on to the consumers, stressed Sancho, it’s “super injustice”.
On the other hand, I pity some innocent and honest Ceneco executives who’ll be dragged to the current brouhaha. Some of them are really “men of integrity” but could end up as “victims” of a “vicious trick”.
Ahay, pobre gid ang masangtan sining kaso!
But Bacolod’s burning questions now are:
* What’s next after this KEPCO-Ceneco wrangle?
* Will Ceneco become the next Panay Electric Company (PECO) in Western Visayas?
* Will the superstorm will be extended ‘till 2025 when Ceneco franchise expires?
Quite exciting! So, abangan!/PN
