AS EVERYONE has experienced, we are living in a time of serious inflation. Government statistics are annualized which tends to underestimate the rate of inflation encountered by all of us over the past three months.
Steadily rising electricity costs are an important component of inflation which is dragging down the standard of living of most of us, except for the fortunate few whose incomes are rising faster than inflation.
The Electric Power Industry Reform Act (EPIRA) of 2001 mandates that distribution utilities should itemize (“unbundle”) the cost factors which make up the overall cost per kilowatt hour (kWh) that we pay. We see some itemization on our monthly bills.
The Central Negros Electric Cooperative (Ceneco) has gone further and his publicized how our overall electricity price is broken down into its components. The overall rate for August 2018 is P12.1384 per kWh. This compares with P5.365 per kWh that I paid Ceneco in March 2009. For prices to more than double in only nine years means that electricity is a significant contributor to our inflation rate.
Panay Electric Corporation (PECO) has had similar increases, though reached P10 per kWh before Ceneco, whereas Ceneco’s electricity is now slightly more expensive than PECO’s.
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We now examine Ceneco’s cost itemization. Approximately 75 percent (P9.1611) per kWh comprises generation and transmission costs. Of this amount, P6.9752 are generation charges payable to entities that supply electricity to Ceneco. These are charges payable to KEPCO-Salcon Power Corp (KSPC), the Wholesale Electricity Spot Market (WESM), Green Core Geothermal Inc. (GCGI), Central Negros Power Reliability (CENPRI)/Energreen and Palm Concepcion Power Corporation (PCPC).
To gain a proper understanding of the generation charges, we need to know the cost per kWh of each of the suppliers. I hope Ceneco will provide this information.
My understanding is that, on average, electricity purchased through the Wholesale Electricity Spot Market (WESM) is less expensive than the electricity obtained through bilateral contracts. The first bilateral contract was signed between Ceneco and KSPC in 2007.
A further separate contract with KSPC was signed in 2011. This second contract was not in the interest of Ceneco’s consumers because it committed Ceneco (and therefore its consumers) to pay for electricity it did not want nor need.
How did this lack of common sense arise? It is not difficult to forecast the amount of electricity required. In any case, WESM deals can make up for any shortfall from the bilateral contracts.
The Energy Regulatory Commission (ERC) also has a lot to answer for. It approves all Ceneco’s contracts. If the contract is disadvantageous to Ceneco’s consumers, ERC shares the responsibility with Ceneco for the bad decisions.
ERC Chairwoman Agnes Devanadera says that she will examine bilateral contracts. She needs to. Nobody considers ERC to a bastion of consumer protection. As mentioned earlier, the details of the bilateral contracts negotiated by Ceneco in an excessive flurry between 2011 and 2016 need be revealed to allow consumers to gain a proper understanding as to why they are paying so much.
Will ERC do what it should do, which is to ensure that consumers are treated fairly? This means revoking those contracts which are not in the public interest./PN
