August 24, 2016 by Stephen Bentley
Lifetime of Baffling Brownouts in Bacolod – Is There Hope?
The article below first appeared in the Negros Daily Bulletin in the Cane Points feature written by Butch Bacaoco. I know Butch well. We are almost related and I suppose will be after I finally tie the knot with Zabrina, his cousin. I am sure he will not mind me describing him as an extremely intelligent man with a flair for writing.
In fact, it’s more than a flair. He is a trained professional and was editor-in-chief of the Bacolod Sun Star for some time. I became aware that he had started writing the Cane Points series and asked his permission to reproduce selected articles here. He agreed. I feel it is important to tap into certain local issues. After all it is my new home.
Yet, as previously stated, I will not comment on political issues in the Philippines. But brownouts and CENECO are issues I feel qualified to comment on. I suffer from unscheduled brownouts just like many other Bacolodnons. Like them, I also pay my electricity power bill to CENECO. To use the modern parlance, I am a stakeholder.
Now, I don’t know the ‘ins and outs’ of the electricity supply industry here. I do know it needs vast improvement in many areas and I also know it (electricity price) is expensive!
It’s a real issue. With this climate it is common for households to run three or four fans (or more) simultaneously to offer relief from the humidity and heat. Air conditioning units are also common for many households. Throw in modern gadgetry such as computers then there is a real demand for the supply of “juice.”
When I read the article below, I was dumbfounded. Without blowing my own trumpet [actually, I am], even with my lawyerly training at one of the best law schools in the world, London’s Inns of Court School of Law, I have decided difficulty in understanding the gist never mind the detail of the “application before the Energy Regulatory Commission (ERC).”
It strikes me of a tactic used by so many “experts” in their respective fields the world over. It is a form of snobbery and an insult to the people who matter – the consumers. There should be no need to “interpret” all this mumbo-jumbo into “laymen’s terms.” It ought to be written in plain English from the very start. As a native and fluent English speaker, it gave me “nose bleed”!
I take my hat off to Butch for his noble (and humorous) effort to interpret this document into “laymen’s terms.” I also take my hat off (tip my hat if you are American) to the below-mentioned Mam Elinore Cabinalla for her activities in the “advocacy for power consumer welfare.” “Power to your elbow” as us Brits would (and do) say!
Mam Elinore Cabinalla may at some time wish to look at a UK government scheme called ‘FIT’ – ‘feed In tariff.’
It is a scheme designed to encourage householders to install solar panels. Once installed the scheme operates along these lines:
- Home owner satisfies his/her own domestic consumption needs
- The surplus is sold off to the National Grid
It’s a great scheme and one that is worth duplicating in the Philippines. Over to you, Mam Elinore Cabinalla.
CANE POINTS: KSPC AND THE FACEBOOK CHALLENGE
When it comes to the advocacy for power consumer welfare, Mam Elinore Cabanilla needs no introduction. She is the mother of a former classmate, a fellow rallyist of my father during the Bayan years, a formidable opponent when I was still Institutional Manager of Vresco (now Noneco) and, recently, a comrade in the electoral campaign.
Mam C tagged me in her Facebook post last Wednesday, inviting me to join a translation contest with free lunch at Viking’s as the prize. She wants to be translated into laymen’s terms the title of an application before the Energy Regulatory Commission (ERC), to wit:
“In the Matter of the Application for the Approval and Confirmation of the Load Factor-Based Pricing Scheme on a Monthly Reconciliation of the Unaccepted Contract Quantity of the Supplemental Agreement between Kepco SPC Power Corporation (KSPC) and Central Negros Electric Cooperative, Inc.(Ceneco) with Motion for the Issuance of Provisional Authority”
I am not a heavy eater but I value the intellectual challenge. Let me give it a try, Mam.
KSPC and Ceneco entered into a Power Sales Contract (PSC) for 40MW base load on July 16, 2007. ERC approved the PSC on February 26, 2009 at a base price of P4.2511/KWH. Moreover, KSPC and Ceneco entered into a Supplemental Agreement to the PSC on July 29, 2011 for an additional supply of 24MW.
Ceneco and KSPC agreed that the price of the 24MW will be based on KSPC adjusted base price and Ceneco actual load factor (percentage of utilization of the 24MW in a 24-hour cycle) for the month.
The higher the percentage of utilization of the 24MW, the lower will be the applicable rate. But then, the rate for the 24MW is still slightly higher than the base load rate and will be based on the pricing table patterned after the original contract approved by ERC.
On November 28, 2011, ERC confirmed that the reconciliation and billing of the 24MW may be implemented without further ERC review and approval. However, ERC said that its approval was for the implementation of the reconciliation and collection on an ANNUAL, not monthly basis.
Thus, the CENECO Board passed a resolution on November 14, 2012, authorizing the joint filing with Kepco of the application for the approval of the load factor based pricing scheme to be reconciled / computed and billed on a monthly basis, instead of annual basis. This is the application (couched in too many words and using such confusing terminologies) which is currently before the ERC.
What is being sought to be approved is the formula for computing the applicable rate for the 24MW and for such computation to be done on a monthly, not annual, basis.
Because of this pending application, KSPC was not able to collect the adjusted cost of the 24MW from July 26, 2011 to November 25, 2013.
In the meantime, KSPC billed Ceneco for its use of the 24MW load according to the base load rate, which is lower than the intermediate load rate. The price difference kept accumulating and has reached P232 million from July 26, 2011 to November 25, 2013.
The covered period stops on November 25, 2013 because, on November 26, 2013, ERC gave provisional authority for the monthly collection and billing of the 24MW additional contracted quantity.
In other words, ERC’s provisional authority acknowledges the legitimacy of the additional 24MW contract between Ceneco and KSPC, as well as the formula used in computing the applicable rate for the 24MW. However, the said order had no retroactive effect. Hence, this pending application before the ERC.
During the ERC hearing last Tuesday at Ceneco, the oppositors failed to present evidence and witnesses to assail and refute the pricing scheme presented by KSPC and Ceneco. Star Lavilla and Wennie Sancho submitted their manifestations while Brick Reyes said that he would file his opposition to the application.
ERC Hearing Officer Atty. Leila A. San Pedro ruled that ERC would take note of the manifestations and opposition but that the application is deemed already submitted for resolution, as the oppositors waived their rights to present evidence and witnesses.
As a consumer, I also balk at the prospect of having to pay the P232 million differential billing sought by KSPC. On the side of KSPC, it also incurred costs in ensuring that this 24MW is made available to Ceneco at all times of the day and at all days of the week. KSPC is also entitled to collect such costs using the ERC-approved formula.
Last I heard, Ceneco’s utilization of the 24MW additional supply is already at a load factor of 88%. Ceneco utilizes the 24MW for 88% of the 24-hour cycle everyday.
Simply put, Ceneco consumes the 24MW for 21.12 hours every 24 hours of the day. It is only during the less than three hours in the early morning, when most of our appliances are turned off, that the entire 24MW is not consumed. During that time, KSPC still runs its generators to ensure that the entire 24MW is available for Ceneco.
KSPC is not charging interest for the P232 million differential billing.
It appears to be such a huge amount but, if given a payment period of five years, it amounts to only P0.0773 per KWH (P232 million / 5 years / 12 months per year / 50 million KWH average monthly sales of Ceneco).
I guess that’s the best I can do, Mam C.
(For reactions and suggestions, email bbacaoco @yahoo.com.)
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