YIKES!
I had written my article entitled “Ceneco” last weekend. Later, I read Erwin “Ambo” Delilan’s excellent piece, “Ceneco faces ‘superstorm’” (PN 22-23 January 2022). My article overlapped his. What follows is my revised version in which I have given different insights.
***
For a long time, the electric cooperatives operated within a centralized system in which generation costs were uniform. Ceneco’s role was simply to bill consumers according to the centralized price (P3.0345 per kWh).
Ceneco was responsible for local electricity distribution. The costs were, of course, passed on to the consumer. We paid around P5 per kWh.
In 2005, then Energy Secretary Vince Perez announced that in future the electric co-operatives would be responsible for negotiating bilateral contracts.
Consequently, Bobby Montelibano, then Ceneco’s president, followed through and in 2007 produced Ceneco’s first contract with Kepco. This contract was reasonable but included automatic price hikes if the cost of raw materials, specifically coal from Indonesia, increased, then the increase would automatically be passed on to Ceneco.
Around 2011 Atty. Lapore, now Ceneco’s president, negotiated a second contract with Kepco. This contract included a penalty clause in which if Ceneco did not purchase in the contract, the Ceneco would have to pay penalty costs.
In 2012, Ceneco fell foul of the penalty clause. Kepco invoked the penalties and in 2013, Ceneco and Kepco made a joint application to the Energy Regulatory Commission (ERC).
I should mention that ERC has to approve all Ceneco’s contracts.
ERC did not make an immediate decision on the joint application. This is understandable since it seems harsh to force Ceneco’s consumers to pay for electricity that they did not want or need and did not receive. ERC’s hesitancy, therefore, was understandable.
By 2014, ERC had not arrived at a decision. Kepco, this time unaccompanied by Ceneco, made another application. Again, ERC did not make a decision.
The amount of money involved, P232 million, was substantial.
Finally, in 2017, ERC made the decision that Ceneco’s consumers would have to pay the outstanding debt for non-existent electricity.
Could this have been the beginning of a deterioration in the relationship between Ceneco and Kepco?
***
Meanwhile, Ceneco’s consumers were having to pay over P10 per kWh.
In contrast, our family’s January 2022 Ceneco bill was ‘only’ P4575.37 for 604 kWh.
This is a cost of ‘only’ P7.58 per kWh.
Ceneco will not be able to pay Kepco’s bill.
We are heading for real problems./PN
