SOME MONTHS ago it was reported that Panay Electric Company (PECO) had applied to the Legislative Franchise Committee of the House of Representatives for a 25 year franchise renewal to supply electricity to Iloilo. As far as I know, this application was neither approved nor disapproved. The clock is ticking because PECO’s franchise expires next year.
Last week it was reported that an entity called More Minerals Corporation (MMC) has applied for a power distribution franchise in Iloilo.
PECO is not happy and questions whether MMC has the necessary expertise to distribute electricity to end users.
In turn not all PECO’s customers are happy. But I consulted an extended family with residences in both Bacolod and Iloilo which reports that there are significantly fewer unscheduled brownouts in Iloilo than Bacolod. Clearly, there are other factors involved but it is not clear that PECO should be replaced.
It is clear, however, that if MMC plans a takeover of PECO, this would not be welcomed by PECO.
The Legislative Franchise Committee has reportedly favored the MMC application. This would seem to be premature if PECO has not indicated its willingness to be taken over by MMC.
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Last week I wrote about high cost of electricity in the areas served by both Ceneco and PECO.
Systems losses are a factor. These losses are divided into technical and non-technical. Non-technical is a euphemism for electricity that is stolen. In the Ceneco region this has been a chronic and, as yet unsolved problem. Ceneco talks in terms of squatters stealing electricity by using jumper cables. I do not believe this is particularly significant. What Ceneco needs to do is to monitor the quantity of electricity supplied to individual customers and to compare this with the customers’ meter readings. Discrepancies would indicate pilferage. Since we are paying an additional P1.20 per kilowatt hour for systems losses, an effective campaign would be of much benefit.
Further to last week’s article, I have now found that it is reported that Ceneco buys approximately 40 percent of its electricity from the Wholesale Electricity Spot Market (WESM). I believe electricity acquired in this way is less expensive than that purchased through Ceneco’s several bilateral contracts. My assertion that the Energy Regulatory Commission (ERC) should examine whether these contracts are in the public interest remains.
With effect from tomorrow, WESM is being privatized. This is as a result of an agreement between the state-entity Philippine Electricity Market Corporation (PEMC) and the private-entity Independent Electricity Market Operator of the Philippines Inc. (IEMOP)
If successful, this would mean that the market would be competitive, efficient, transparent, and reliable. Bilateral agreements which usually result in more expensive electricity for consumers will eventually become redundant.
PECO’s contracts should be examined before any franchise decision is taken./PN
