LAST week’s announcement from the Central Negros Electric Cooperative Inc (Ceneco) that the average residential rate for the billing month of March 2021 is P11.5038 per kilowatt hour (kWh) reflects a decrease of P0.0658 per kWh compared to the February 2021 cost of P11.5696 per kWh.
For a family consuming 300 kWh per month, this decrease represents a reduction in the monthly bill from P3,470.88 to P3451.14.
A reduction of P19.74.
Not a lot!
But every little counts.
The monthly cost per kWh is related to the various bilateral contracts that Ceneco has signed (under the authority of the Energy Regulatory Commission (ERC)) with its suppliers which include Kepco Salcon and Palm Concepcion Power Corporation.
Ceneco also buys electricity from the Wholesale Electricity Spot Market (WESM).
Under current conditions, the cost per kWh that Ceneco pays WESM is often less than the cost of electricity sourced from bilateral contracts.
This accounts for the quite significant variations in the prices paid by the consumers of the various electric cooperatives.
For example, a few months ago, when Ceneco was charging its consumers P11 per kWh, an adjacent electric cooperative, Northern Negros (Noneco), was providing its consumers with electricity at a rate of only P8.50 per kWh.
The difference, P2.50 per kWh, is unconscionable and shows that Ceneco is paying its suppliers too much.
Agnes VST Devanadera, ERC Chairperson, reportedly mentioned that ERC would undertake an examination of the various cooperatives since it is clear that some contracts, including some signed by Ceneco, are not demonstrably in the public interest.
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Ceneco’s current charge of around P11.50 per kWh is much higher than the average cost charged by the other cooperatives around the Nation.
According to the National Electrification Administration (NEA), the average price paid by the consumer in 2019 was P9.57 per kWh (almost P2 per kWh cheaper than Ceneco).
The total revenue obtained from consumers in 2019 was P221.4 billion from sales of 23,127 gigawatt-hours (a gigawatt is one million kilowatts).
In 2020, despite the pandemic, electricity sales rose to 23,622 gigawatt hours. The cooperatives, as directed by the ERC, extended the ‘grace period’ for bill payments. This has created a serious cash flow problem for the industry. It has meant that the 2020 revenue was P211.5 billion whereas with the prompter payments required in pre-pandemic 2019, the revenue was P221.4 billion.
The cooperatives’ accounts receivable is now P10 billion more than it was in 2019.
It is all very well for ERC to be magnanimous about payment, but how will the P10 billion increase in receivables be reduced?
Will it ever?
If not, does this mean that the prompt paying consumer will be, in effect, subsidising those who take advantage of extended grace periods?
Is this fair?/PN
