By ERWIN ‘AMBO’ DELILAN
BACOLOD City’s Mayor Albee Benitez has these current power hankerings for the Energy Regulatory Commission (ERC) and Central Negros Electric Cooperative (Ceneco):
* clarify “confusing rates” of power supply contracted by Ceneco with Palm Concepcion Power Corporation (PCPC) in Iloilo
* explain the basic criteria how to be a contestable (power) customer
In a press conference on Monday, Jan. 9, he told the media that he already asked both Ceneco’s acting manager, Atty. Vic Alvaro, and ERC chairperson Monalisa Dimalanta regarding the confusing power rates of PCPC.
This, as he stressed that the 32.25 percent of the contracted power supply of Ceneco with PCPC has a rate of P14.6961 per kilowatt hour (kWh). While the additional 19 percent only cost P10.2747/kWh.
The mayor, therefore, wants a detailed comparative breakdown.
“As your partner in public service, the city is one with Ceneco in looking for and pursuing measures that would lessen the cost of electricity in Bacolod,” the chief executive said.
CAPITAL RECOVERY FACTOR
So, let’s have a simple drill on “Power 101”.
Ceneco’s 32.25 percent power supply from PCPC, per documents, was contracted in 2017. The additional 19 percent was contracted in November 2022.
Question: Why has the 2017 contract a higher price compared to 2022?
Let it be known that PCPC’s 270-megawatt (MW) Circulating Fluidized Bed Combustion (CFBC) coal-fired power plant was inaugurated on Nov. 28, 2016. And the Ceneco-PCPC contract for 32.25 percent power supply was inked in 2017. Hence, what’s included in the approved contracted rate was the Capital Recovery Factor (CRF).
CRF ain’t new in the power industry and other businesses. Mayor Albee, being a businessman, is presumed to be knowledgeable about this.
CRF, in general business, is a ratio used to calculate the present value of an annuity. In the power industry, CRF is technically defined as 7.16 or CRF =i1+in1+in.
The “I” stands for interest rate and “n” for the lifetime in years.
Tricky, but that’s it!
In simple business parlance, CRF is somehow equivalent to return of investment (ROI).
Now, question: Is CRF allowed by ERC?
Yes, it’s included in the prudent cost that ERC allows as long as it is within the mandated power price cap.
Why?
Purpose of CRF: To entice investors in the power industry to build more plants to address the rising power needs of the country – be it fossil- or renewable-based.
Another thing to know is, CRF varies depending on the kind of power plant to be constructed, and the period of construction.
That’s why the 2022 power contract of Ceneco with PCPC is cheaper because it doesn’t include the CRF already.
Besides, power rates in the country are reviewed and approved by ERC before they’re implemented by distribution utilities (DUs) like Ceneco.
Hope Mayor Albee gets it well.
CONTESTABLE CUSTOMER
Meanwhile, Mayor Albee, in a previous ambush interview, bared that he already penned a letter to ERC, asking about the criteria on contestable customer.
The mayor wants to follow suit with that of Ayala, SM, Robinsons, among other giant businesses in the country who are free to choose their respective power provider(s).
Thus, he wants the more than 200,000 power consumers in Bacolod to be pooled into one contestable customer.
But the mayor’s wish is “next to impossible”.
Why?
No statute yet that could grant his desire.
The Department Energy’s (DOE) Circular No. DC-2017-2-0013 is “loud and clear” in enunciating that to be contestable customer, you must be a large power end-user consuming an average peak demand (APD) of 500 kilowatt (kW) or more for the preceding 12 months.
Before, the required APD was one megawatt until ‘twas reduced to only 500 kW a year after the said circular took effect in 2017.
And this particular DOE’s circular is anchored on Section 31 of the Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001, which empowers the Retail Competition and Open Access (RCOA).
RCOA is the provision under EPIRA Law concerning contestable customer.
And the truth is, if residential consumers will be pooled into one contestable customer, they still don’t have the technical capabilities and manpower to dwell on the matter. Thus, obviously, quite uphill.
At present, no local government unit (LGU) in the country is capable yet to explore this matter for the sake of its constituents because of the technical intricacies within. So, perhaps, quite a “long shot”
Nonetheless, I wish that Mayor Albee may soon find someone who’s an expert in the power industry sector as his next consultant so he’ll sound “relevant” in whatever he wishes for the sake of the power consumers in Bacolod./PN
