Consumers as well as the management of the First Catanduanes Electric Cooperative, Inc. (FICELCO) last week appealed to the Energy Regulatory Commission (ERC) to reduce or implement gradually the huge generation rate increase sought by the National Power Corporation (NPC).
In the Expository Presentation conducted by ERC at FICELCO headquarters last April 11, 2024, General Manager Engr. Francis Gianan said that while he understands the position of the state power firm, the proposed P1.2082/kWh increase for residential users and P2.6588/kWh for commercial customers will heavily impact the 59,000 member-consumer-owners of the cooperative already grappling with the high cost of living.
“Mabigat ito para sa aming consumers,” the general manager stressed. “Sana babaan o gawin in tranches, hindi biglaan.”
ERC Commissioner Alexis Lumbatan, who presided over the hearing, assured that the voice of the Catanduanes electric cooperative and the consumers will be heard by the commission.
According to the NPC officials headed by Atty. Bienvenido Mabulac II, the True Cost of Generation Rate (TCGR) has already increased from P11.8077 per kilowatt-hour in 2002 to P33.1456/kWh in 2022, or an hike of 181 percent, mainly due to increasing fuel cost and inflation.
Along with the average 23% annual increase in energy sales to Catanduanes, fuel costs incurred by the NPC Small Power Utilities Group (SPUG) increase by an annual average of 9%, with the last spike occurring in 2022 due to the Russia-Ukraine conflict.
It also pointed out that compared to the generation rates of nearby electric cooperatives in the main grid, the SAGR in the SPUG areas like Catanduanes is significantly lower.
This means that the existing SAGR of P5.6404/kWh which have been maintained since 2003, is heavily subsidized by the national government through the Universal Charge-Missionary Electrification (UCME).
For example, the NPC stated, of the P33.1456 TCGR for 2022, P27.5052 or 83 percent is subsidized by the government through UCME.
The 2022 subsidy comes up to a total of P4.68 billion, of which P3.18 billion will be collected by Sunwest Water & Electric Co. (SUWECO), the island’s lone private power supplier, while P1.5 billion will be claimed by NPC.
It argued that based on government statistics, the people of Catanduanes have the capacity to pay the higher SAGR rates as the region’s Gross Domestic Product (GDP) rose by 438% from 2003 to 2021 while the average household income and savings also increased by 167% and 377%, respectively.
If approved by ERC, the new SAGR would be P8.5982/kWh for residential customers and P10.9488/kWh for commercial customers.
NPC later clarified that the SAGR for streetlights and public buildings would be the same as that for residential users.
The cooperative management, however, averred that the higher SAGR will force consumers to tighten their belts and reduce power consumption, resulting in lower revenues for FICELCO.
In Board Resolution No. 41 passed during its 6th regular meeting last March 22, 2024, the FICELCO Board expressed its strong opposition to the NPC petition, noting that Catanduanes continues to struggle with high inflation, recording 4.2 percent this January 2024, surpassing the national average of 2.8 percent.
The new SAGR application would bring a 23.68 percent increase for residential consumers and 44.55 percent for commercial users, not including the additional 12 percent VAT.
Pointing out that the increase would inflict additional hardship on constituents, the co-op board said a residential consumer with 100 kWh monthly consumption would shoulder an extra burden of at least P127 exclusive of VAT.
On the other hand, a commercial user previously billed P87,267.49 for 10,000 kWh in January 2024 would have to fork P26,939.79 more for his bill, VAT included.
“Any rise in missionary electrification subsidy requirements must be covered by the UCME and not included in the SAGR to mitigate its impact on electricity consumers across the country,” the measure stressed.
The increasing UCME requirements in the SPUG areas should have been prevented through the implementation of mechanisms in RA 9136 or the EPIRA Law such as the graduation of the island grids from missionary electrification by connecting them to the main transmission system and the deployment of renewable energy resources, it added.
As a government-owned and-controlled corporation, NPC, along with the Department of Energy and ERC, should prioritize the well-being of off-grid consumers who face limited choices in accessing affordable electricity compared to those living in the main grid, the management said.
According to FICELCO’s rate impact simulation per level of consumption, the proposed SAGR will result in an effective rate of P13.7825 per kWh for residential customers, as well as public buildings and streetlights, and P11.4130 per kWh for commercial users.
As of the 1st quarter of 2024, FICELCO has a total of 59,646 member-consumer-owners, with residential users account for 55,305 or 92.7 percent and commercial customers just 2,324 or 3.9 percent. Public building and streetlight accounts are 1,429 and 414, respectively.
Board President Dir. Rodolfo Vargas likewise sought the return of the Balongbong Hydroelectric Power Plant (BHPP) to the cooperative, nearly four decades after it was taken over by the national government in 1988 and given to NPC.
Coop finance officials also questioned the fact that NPC is applying the same SAGR to both diesel plants and hydro power plants, when the latter does not use fuel, as well as the imposition of excise tax on renewable energy.
In response, the ERC commissioner promised to consult the matter with the legal division.
Several MCOs also appealed to NPC and ERC to consider a lower SAGR increase or defer it altogether to alleviate the plight of abaca farmers.
Commissioner Lumbatan admitted that the increase in SAGR could no longer be delayed while the proposal to set the SAGR at the same level for off-grid and main grid SPUG co-ops is driven by complaints that those in the latter are shouldering the higher UCME requirement.
He advised FICELCO to bring their concern regarding Balongbong HPP to NPC as the Commission cannot address the matter.
During the same hearing, the ERC gave the provincial government five (5) calendar days within which to manifest its intent to intervene in the case.
PBM Joselito Alberto, who read the SP resolution opposing the NPC petition, agreed to consult Governor Joseph Cua and Vice Governor Peter Cua regarding the ERC deadline.
In the resolution, the provincial board underscored that the proposed increase in SAGR contradicts the national policy of providing electricity at the least cost manner and would bring about tremendous harm to residential MCOs, reducing disposable income and worsening the livelihoods of communities in remote areas.
Echoing the position of the Philippine Rural Electric Cooperatives Association (PHILRECA), the SP called on the national government, particularly DOE, ERC and the National Electrification Administration to explore long-term solutions for SPUG areas, such as fast-tracking the connection of off-grid areas to the main transmission system.