FOR MANY years, the Insurance and Energy Regulatory Commissions have vied to be the least competent government instrumentality in providing constitutionally-enshrined consumer protection.
Last Thursday’s (28 Jan 2021) PN printed a joint application between MORE Power and Kepco Salcon to the ERC to supply electricity to the vulnerable denizens of MORE Power’s area of responsibility. Although details of the contract are lacking, there are glimmers of hope that ERC will be able to support a more equitable relationship between the electricity supplier and consumers than existed hitherto.
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Problems started in 2005 when Energy Secretary Vince Perez announced that local electricity entities would be responsible for negotiating, with ERC’s approval, contracts with electricity suppliers. Before, consumers paid a nationally uniform charge of P3.0345 per kilowatt hour for centrally generated electricity. Local distribution units had no responsibility for electricity generation contracts.
Consequently, in 2007, the Central Negros Electric Cooperative (Ceneco) negotiated its first contract with Kepco Salcon. I believe that this contract has worked reasonably well. On the other hand, I recall that PECO negotiated a contract, not with Kepco Salcon, which caused PECO’s consumers to be, as far as I am aware, the first in the Visayas region to pay more than P10 per kWh. There was runaway inflation caused by the disadvantageous contract.
In 2011, Ceneco signed a second contract with Kepco Salcon which has produced long-standing problems which are still with us to-day. This contract grossly over-estimated Ceneco’s projected electricity consumption. Since there was a penalty clause to be invoked if Ceneco did not purchase the contracted electricity, then the over-estimation has caused Ceneco’s consumers to pay for electricity that they did not ask for, did not need, and did not receive. Will MORE power have to pay penalty costs to Kepco Salcon if it does not purchase the contracted electricity?
By 2013, a joint application was made to ERC by Ceneco and Kepco Salcon to force Ceneco’s consumers to pay P189 million for the non-existent electricity.
Perhaps shamefacedly, ERC did not make an immediate decision. In 2014, Kepco Salcon, this time unaccompanied by Ceneco, made a second application to squeeze money from Ceneco’s consumers. Again, ERC did not make a decision to approve Kepco Salcon’s request.
Finally, in 2017, ERC approved Kepco Salcon’s application (now for P232 million) and, consequently, to this day, Ceneco’s consumers are having to pay for the non-existent electricity. To add insult to injury, we are also having to pay Value Added Tax (VAT) on the phantom product.
Is this why the joint MORE Power/Kepco application provides MORE Power’s Supply and Demand Scenario to demonstrate that MORE Power does need the contracted electricity? Did Ceneco supply similar information in 2011? If not, then ERC should not have approved the contract because Ceneco did not demonstrate that it needed the electricity. ERC’s 2017 decision to penalize Ceneco’s consumers is fatally flawed because it could have been established that Ceneco did not need the electricity specified in the 2011 contract.
The ERC could, therefore, justifiably reverse its dubious 2017 decision. Ceneco’s consumers should be refunded, with interest, that part of the P232 million that has already been paid.
We welcome the 2018 arrival of Agnes VST Devanadera as ERC Chairman. At one point, it was reported that she would re-examine ERC’s approval of bilateral contracts. We hope she will reverse ERC’s 2017 decision.
Will ERC finally agree to provide fair treatment for Ceneco’s consumers?/PN
