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BY NEIL HONEYMAN
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THE RECENT announcement from the Office of the Ombudsman ordering the suspension of Energy Regulatory Commission (ERC) commissioners Gloria Victoria C. Yap-Taruc, Alfredo J. Non, Josefina Patricia A. Magpala-Asirit, and Geronimo D. Sta Ana for one year for violating Republic Act No. 3019 or the Anti-Graft and Corrupt Practice Act draws attention to the unsatisfactory state of affairs with regard to electricity acquisition.
We need to know more.
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In 2005, then Energy secretary Vince Perez came to Bacolod City and asked Central Negros Electric Cooperative (Ceneco) officials what they were doing to source electricity. This was his way of saying that a new system was being put in place so that Ceneco was jointly now responsible, with ERC, for negotiating power supply agreements (PSA) with suppliers.
Consequently, in 2007, Ceneco signed its first PSA with Kepco-Salcon, a Korean entity. It is not clear what steps were taken to ensure that the most advantageous conditions were obtained for Ceneco’s consumers. The contract is long-term (it is still in force) and has built-in safety (for the supplier) clauses in the event of increases in the cost of fuel, in this case, coal.
At the time, there were grumblings in Bacolod coffee-shops about the contract. There were those who hinted darkly, but with alarming specificity, about suspected kickbacks to Ceneco’s directors. “But the real money went to ERC” was to tsismis.
Grossly unfair? Possibly, but lack of transparency generates unkind comments. Who found Kepco-Salcon? Ceneco? ERC? Who negotiated the contract? After all, Ceneco’s board was elected by member-consumers on the basis of their ability to represent their interests in terms of local supply. Negotiating PSAs was not previously part of directors’ job description.
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The second contract negotiated with Kepco-Salcon in 2011 has aroused more controversy. This is because Ceneco (“with the provisional authority of the ERC”) negotiated a contract which is demonstrably disadvantageous to the consumer. This is because Ceneco agreed to purchase electricity which the consumer did not want, did not need, did not ask for, and did not receive. Kepco-Salcon wants us to pay for this non-existent electricity but Bacolod’s ungrateful denizens have let it be known that it does not agree, even though dismissed ERC chairman and CEO Jose Vicente B. Salazar said we should. On shooting a dead horse grounds, the Ombudsman has also suspended the previously dismissed official.
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What about Panay Electric Company (PECO)? Its supplier, Global Business Power Corporation (GBPC) is understandably nervous about whether PECO’s franchise, due to expire in 2019, will be renewed. If it is not, where does this leave GBPC? Presumably the new supplier can, if it wishes, negotiate a new contract with GBPC. Would this contract be more favorable to the consumer? I hope so.
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Last week’s announcement that Ceneco is having a one-hour radio program is welcome. As a result of hyperactivity between 2011 and 2015, Ceneco now sources its power supply from four generation utilities. Ceneco mentions that it also purchases electricity from the Wholesale Electricity Spot Market (WESM) in cases of shortage. But prices obtained from WESM are usually lower than the prices obtained from Ceneco’s disadvantageous bilateral contracts. I hope Ceneco’s radio program will feature authoritative details as to how it will reduce costs.
Between 2009 and 2017 Ceneco’s charges to consumers has approximately doubled from P5.35 per kilowatt hour (kWh) to P10.60. An increase of 100 percent in only eight years makes nonsense of Bangko Sentral ng Pilipinas (BSP) assertion that our inflation rate is between two and three percent.
PECO was the first utility in the Philippines to break the P10 per kWh barrier (which was no barrier at all).
Will we see fairness at last?
Unlikely, so long as ERC exists in its present form./PN
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