Residential consumers would have to pay as much as P20 per kilowatt-hour for electricity under the Emergency Power Supply Agreement (EPSA) being considered to avoid rotational brownouts in the Catanduanes grid that began last Monday, Oct. 7, 2024.
A source said the proposed power deal would not be eligible for any subsidy from the government given to approved electricity supply agreements of off-grid areas from the Universal Charge for Missionary Electrification (UCME).
Pursuant to Department of Energy (DOE) Circular No. DC2023-06-0021, an EPSA can be implemented immediately, but electric cooperatives (ECs) undergoing this agreement will receive no subsidy, with their customers to pay the True Cost of Generation Rate (TCGR).
In September 2024, the average power rate for residential consumers of the First Catanduanes Electric Cooperative, Inc. (FICELCO) in the 11 towns of Catanduanes was at P13.45125 per kWh.
Thus, with the impending emergency power contract, the rate for residential electricity would rise by 48 percent at the minimum. This would apply only on the 6.6 megawatts of added capacity provided by SUWECO under the 2nd Amendment to its contract with the cooperative.
This would have to be borne by the island’s more than 50,000 consumers for some time until the Energy Regulatory Commission rules favorably on the Motion for Reconsideration filed by Sunwest Water & Electricity Co. (SUWECO) on the commission’s dismissal of its joint application with the FICELCO on the approval of the 2nd Amendment to its Electricity Supply Agreement (ESA).
Last Monday, Oct. 7, 2024, FICELCO started implementing daily rotating brownouts ranging from one to two-and-a-half hours following last week’s shock announcement from its lone supplier that it would scale down its power plants’ operation due to the P285-million billing that the National Power Corporation refuses to pay.
The cooperative management was forced to resort to load shedding after SUWECO management turned down the cooperative board’s appeal that the scaling down of operation be delayed for two weeks.
The power supplier reportedly told the cooperative that the unresolved subsidy billings caused financial strain and deficits in its cash flow.
It stressed that the scale-down of its diesel power plant operations is the “best possible but regrettable solution” to its present situation and is actually intended to prevent the complete shutdown of operations.
SUWECO reiterated that its decision was not done hastily, without warning and without consideration, as it had already verbally notified FICELCO as early as June 2024, expressing caution that continued delays in the subsidy payment might force the company to reduce its operations.
According to a reliable source, the rotating brownouts to be implemented until Oct. 11 at the very least would last two hours in the early morning from 3 AM to 5 AM, two-and-a-half hours each in the morning from 8 AM to 10:30 AM and in the afternoon 2 PM to 4:30 PM, and 6 PM to 7 PM in the evening.
Each of the feeders will experience the power outage twice in the next five days, with the schedule to vary depending on actual demand and available power supply.
In a press release issued on Oct. 4, SUWECO said it would be scaling down its operation by up to three hours per day starting Oct. 5, blaming NPC’s “unilateral” deferment of P285 million in SUWECO’s billings from the Universal Charge for Missionary Electrification (UCME) since May 2024.
In an official statement last Saturday, Napocor clarified that it pays the UCME subsidy to power suppliers in islands and off-grid areas if such is approved by the Energy Regulatory Commission (ERC).
It said that SUWECO’s claims are not being paid because ERC has declared the power firm “ineligible” for the subsidy pursuant to the Commission’s Order in ERC Case No. 2013-123 RC promulgated on Jan. 23, 2024 which it said is immediately executory.
The state power firm assured SUWECO, FICELCO and the people of Catanduanes that it would obey the ERC once it issues a decision on the motion for reconsideration filed by SUWECO.
It is claimed that Napocor will also direct SUWECO to return all payments made for the operation of two power plants in Marinawa and Viga since both started commercial operations as they fall under the questioned 2nd Amendment.
In its order on the joint application filed on Nov. 25, 2022 by the FICELCO and its lone power supplier seeking approval of the 2nd Amendment to their Electricity Supply Agreement, the ERC noted that the amendment provides capacity of 6.6 megawatts using diesel generators in addition to the contracted capacity in the original ESA.
“Upon deliberation and evaluation, the Commission finds that the process undertaken for the 2nd Amendment to the ESA to provide additional capacity to FICELCO is not compliant with existing policies on Competitive Selection Process (CSP) of the Department of Energy,” it said in dismissing the joint application.
It reminded the applicants that “any implementation of the subject 2nd Amendment to the ESA shall be considered as ineligible supply contract pursuant to the Commission’s Resolution No. 14. Series of 2022” that adopted revised rules governing Automatic Cost Adjustment and True-Up Mechanisms and Corresponding Confirmation Process for Distribution Facilities.
The order was signed by ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta, who was suspended from her office for six months by the Office of the Ombudsman (OMB) from office last Aug. 27, 2024.
The chairperson’s preventive suspension was based on a complaint filed against her by the National Association of Electricity Consumers for Reforms, Inc. (Nasecore) for alleged Grave Misconduct, Grave Abuse of Authority, Gross Neglect of Duty, and Conduct Prejudicial to the Best Interest of the Service.
Nasecore claimed that Dimalanta allowed the Manila Electric Company (Meralco) to purchase electricity from the Wholesale Electricity Spot Market (WESM), with the former passing on the charges to consumers without first securing the approval of the ERC, in violation of the Electric Power Industry Reform Act (EPIRA).
SUWECO DIESEL GENSETS AT THE MARINAWA POWER PLANT. Power produced by these gensets are covered by the 2nd Amendment of the supply contract between FICELCO and SUWECO, which means it would be priced at true cost and result to a power rate of at least P20 per kilowatt-hour.