Last week, Provincial Board Member Joselito Alberto called on the Sangguniang Panlalawigan to schedule a hearing before the Committee of the Whole regarding the ongoing dispute between the Sunwest Water and Electric Co. Inc. (SUWECO) and the National Power Corporation (NPC).
The dispute over the payment of SUWECO’s subsidy claims to be charged against the Universal Charge Missionary Electrification (UCME) has led to its scaling down of operations in the Catanduanes grid, forcing the First Catanduanes Electric Cooperative, Inc. (FICELCO) to implement rotating brownouts lasting as long as two-and-a-half hours.
As PBM Alberto pointed out, SUWECO plays a vital role in providing electricity in the province (it is the sole supplier) and the impasse has far-reaching implications for the island’s energy security and economic development.
An order of the Energy Regulatory Commission (ERC) last January 23, 2024 dismissed the Joint Application filed by SUWECO and the cooperative for the approval of the 2nd Amendment to their Electricity Supply Agreement (ESA), on the ground that the amendment did not adhere to existing guidelines of the Department of Energy (DOE) mandated Competitive Selection Process (CSP) supposed to govern procurement of additional capacity for on-grid and off-grid cooperatives.
Citing the ERC’s ruling that any implementation of the 2nd Amendment would be considered an ineligible supply contract, NPC deferred the payment of subsidy billings for SUWECO’s Marinawa 1 and Viga diesel power plants, placing the private supplier in a precarious financial position.
In his privilege speech, PBM Alberto called for a hearing tentatively scheduled on Oct. 30, 2024, with representatives of the SUWECO, NPC, DOE and ERC as well as FICELCO and its member-consumer-owners, in a bid to thresh out legal and technical issues and explore possible solutions.
To be clear, this is not the first time that the ERC has ruled against SUWECO and FICELCO in a similar manner.
In March 2015, their 1st Amendment to the ESA was submitted for approval to the Energy Regulatory Commission and in June that year the latter authorized the cooperative to draw power from SUWECO’s diesel genset plant but at the higher True-Cost Generation Rate in the absence of compliance with the CSP, which is a condition for entitlement to the UCME subsidy.
It would take seven more years, in 2022, before the Commission would allow the two parties to implement the 1st Amendment and allow SUWECO to claim the UCME subsidy reckoned from March 2016, the time FICELCO complied with the CSP requirement.
It should be noted that the 2nd Amendment covering the provision of additional diesel gensets with a capacity of 6.6 megawatts was approved by the FICELCO Board of Directors two months after the initial amendment.
Apparently, there was no imperative to have the 2nd Amendment subjected to the CSP as it did not require the cooperative to purchase electricity from the new set of gensets in excess of its requirement; it only obliged FICELCO to inform SUWECO of any additional demand for electricity and the latter is obliged to provide the same.
Considering the legal aspects that need to be considered, the provincial board should make an extra effort to ensure that the concerned officials of SUWECO, FICELCO, ERC, NPC and DOE would be present during the hearing.
Failing that, PBM Alberto’s effort to at least lead all parties to a mutually acceptable resolution of the matter would go the way of the much ballyhooed but largely useless hearing on the high fuel prices of the island.