Power rate increase

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Friday, August 22, 2014

I LOOK forward to the rainy season for lower electricity rates. Down, boy. Instead, I’m supposed to pay Central Negros Electric Cooperative Inc. (Ceneco) an extra 12 centavos in its residential power rate for August.

The explanation for the increase? The gobbledygook excuse for the increase is blamed on the generation system charge because of the 20-day scheduled preventive maintenance of the Kepco-Salcon Power Corporation which led to exposure in the Wholesale Electricity Spot Market (WESM).

Economic exposure matters most to companies conducting foreign business, as it directly impacts their operations. Since Kepco relies on imported coal, any changes in the forex can increase – and possibly decrease – prices.


However, with increased global trade, the effects of economic exposure are felt by all consumers as it can impact the prices paid for foreign goods.

Ceneco explained that the generation system charge, the biggest contributory factor to the rate decreased by P0.5261 percent kWh due to stable power supply and lower price in the WESM.

So why the increase? Supply of power is supposed to increase over time, creating competition that results in a lower price. Decreasing the price of power that consumers pay for in Luzon and Visayas is the sole goal of the WESM.

Ceneco president Arnel Lapore argued that the utility has to claim under-recoveries of P414.6 million spread in the next three years so that the company can survive.

Lapore underscored its price increase as legitimate, pointing out that if Ceneco continues to absorb the under-recoveries, it will be unable to survive in the next two years. The factors for these under-recoveries include the mismatching of costs from generation, transmission and system’s losses.

He argued that “these recoveries are not by reason of inefficiency but of restructured formula” and that under-recoveries might take a seven-year recovery period.

In other words, we can expect more price increases for several more years. It’s no longer a supply and demand concern but state-imposed. Instead of market economics, as Republic Act (RA) No. 9136 (Electric Power Industry Reform Act of 2001) envisioned.

RA 9136 mandates the Department of Energy, jointly with the electric power industry participants, to formulate the detailed rules for the WESM.

A “restructured formula” by energy sector stakeholders is beginning to sound like price fixing by a cartel acting to eliminate cutthroat competition and price wars. In other words, to cook up a formula at expense of the consumers.

Ceneco earlier revealed price fluctuations. In June, residential power rate decreased by almost P0.16 centavos. Compare that with the 22-centavo increase in its residential rate in May; April, a 46-centavo increase. Do the math. I’m beginning to suspect overrecovery than underrecovery.

Worse, Lapore insists that the prices increase not due to “inefficiency.” I beg to disagree. Why do we experience intermittent brownouts with no explanation whatever from Ceneco? That’s a proof of efficiency?

A price increase? No way! Consumers are not getting value for their monthly bills.


Published in the Sun.Star Bacolod newspaper on August 22, 2014.


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