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Friday, March 29, 2024

12-m consumers bear brunt of power rate increase

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SOME 12 million electricity consumers in Luzon stand to pay P17 billion in the next few months due to the adverse effect of the recent decision of the Court of Appeals that reversed the orders of the Energy Regulatory Commission, which voided the prices in the Wholesale Electricity Spot Market for the electricity sold there during the supply months of November to December 2013.

This was the period when the Malampaya natural gas facility underwent a scheduled shutdown for maintenance purposes. 

The ERC Order was based on the ground that the prices were exceptionally high.

 The CA decision, promulgated on Nov. 7, 2017, effectively overturned the ERC Order, and reinstated and declared valid the prices of the November and December 2013 supply months in the WESM for the island of Luzon.

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 The CA’s Fifteenth Division through Associate Justice Soccoro B. Inting ruled that the assailed ERC Orders were being issued without due process. 

The Court of Appeals claimed ERC committed errors of fact and law in the exercise of its quasi-judicial functions, which warrant the reversal of the assailed Orders.

 Power generation companies would have gotten a P24 B windfall from the WESM in November & December 2013 because of the sudden price increase. 

This would have jacked up electricity rates for some 12 million customers at the time.

 But the ERC intervened, and ordered a recalculation of WESM prices based on ex-post load-weighted averages from January to September 2013.

 This resulted in Luzon electricity consumers paying only P7 billion to generation companies, instead of the P24 B.

 Electricity consumers in Luzon will now bear the brunt of the recent CA decision. 

The decision would push distribution utilities to collect from end-users more than P17 billion.

 It will also force a normal Filipino household to fork over more than P700 on the average, on top of its usual electric bill for the month.

Commercial establishments and manufacturing firms would have to pay, on the average, an additional P10,000 and P350,000 respectively.

 A similar case happened in Central Luzon: due to the high prices in November 2013, the generation charge of Tarlac 2 Electric Cooperative (TARELCO II) went up to P9.60/kWh in December from P5.18/kWh in the previous month.

 Because of spike, overall rates increased to P15/kWh from P10/kWh in November. 

The mayor of Capas intervened and filed a case against the collection of TARELCO II for December 2013 charges.

Like TARELCO II, the Camarines Sur Electric Cooperative II (CASURECO II)’s average rate rose from P 11.50/kwh in November 2013 to P15/kWh in December 2013. 

CASURECO II was not able to collect from its customers, and received a notice of default from PEMC for unpaid WESM bills for December 2013 supply month.

Power generation companies, who have the most to gain from the CA decision, did not lose money in 2013.

An industry study shows that these companies reported an income of over P50 B in 2013 alone. 

Under the recent CA ruling, they stand to gain an additional windfall of P17 B, much of it to be passed on the Filipino electricity consumers.

Consumer groups such as Citizen Watch and Bantay Kuryente are impelling ERC to assume its mandated role of protecting consumers’ rights.

The groups hope that with ERC filing a Motion for Reconsideration, the CA will stop from allowing DUs/ECs to collect P17 billion from consumers.

 The ERC must take a pro-active stance by removing the supply vulnerabilities and decide on pending on power plant applications that will boost our generation capacity and widen the reserves, these consumer groups pointed out.

With the appointment of Agnes Devanadera as new ERC chairman, these groups believe a decision can be made on the pending power supply agreements that would help generate the country’s much needed baseload needs.

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