[Opinion] The unpleasant truths

The consumers of Iloilo City were influenced by Panay Energy Development Corp. (PEDC), our local politicians, and business groups into believing that electricity rates will be significantly reduced once the 164-MW coal-fired power plant will become operational.

Indeed, there was some reduction yet the experience was like a “honeymoon period” for enjoyment was momentary. The electricity rate had rebounded to its old level and Iloilo City is once again on top with the most expensive power rate among key cities in the country. Sad to say, there will be little relief from this situation for PEDC and PECO has an approved 25-years power supply contract.

On top of the PEDC and PECO contract, the consumers are likewise confronting a host of increases in the days and years to come. Our local officials then who were lazy to think of better alternatives for power generation will now have to stand accountable to its constituents and before the business sector who are suffering from sluggish economic activity as an impact of high power rates.

This is now a day of reckoning for those that pushed for coal power as the wisest choice for power supply for Iloilo City and for Western Visayas. Government officials and the influential business groups will now have to swallow the bitter pill of high power rates as a result of its wrong decisions and poor foresight. There is no amount of public relations effort from PEDC that can hide the fact that generation rates from the coal plant is exorbitant and the high cost of electricity is taking a toll among consumers.

The social networking site over the internet offers an overflowing discussion on the issue after consumers learned that the generation charge will go up due to the recent order of the Energy Regulatory Commission (ERC) authorizing PEDC to charge P0.3242/kWh for under-recoveries within a 5-year period. The amount will fall under the generation charge and will be collected by PECO to its consumers, and, in turn, hand over the amount to PEDC.

The City Government of Iloilo City who is an intervener on the petition has filed an omnibus motion for reconsideration to ERC requesting the Commission to defer its implementation of the under-recoveries and or extend the recovery period to seven years, instead of five years, in order to further reduce the amount and lessen the impact to consumers.

The City Government likewise asserted that PEDC’s sister company Panay Power Corp. (PPC) is still enjoying the collection of two rate recoveries earlier ordered by the ERC on two separate cases and with a consolidated amount of P0.32/kWh.

At the very least, the City Government must have realized that the ERC has ears not focused on consumers or on consumers’ groups or the local governments. It is worth noting that the ERC’s recent decision was grounded on the motion for reconsideration filed by the City Government which the ERC “partially granted”. On the other hand, another intervener, All-Pinoy has the same assertions with the City Government yet its motion for reconsideration was denied by the ERC.

I will not be surprised if the City Government’s next move is to request for PEDC’s contract to be extended to 50-years in order to slice into half the approved generate rate of the ERC. It just failed to realize that the ERC has an established track record of favoring power utilities.

But what are all these under-recoveries points out? It tells us about the unpleasant truth that power generating companies and distribution utilities has all the space to recoup whatever amount it has not collected for a particular period. It also tells us that the ERC provides the steady mechanism for these companies to conveniently recover amounts, which was either not charged to consumers or for the reason that prices has changed like the fuel cost. These mechanisms offer a legroom for generating companies to become innovative in order to gain more profits.

Another unpleasant truth that surprisingly caught the attention of consumers is the capital recovery fee. Many failed to realize that the entire capital requirement of building a coal plant is charged to consumers. The capital recovery fee is a major item in the computation of the generation charge. The amount is the basic charge by a generating company to its consumers and spread out in its 25-year contract.

The message is clear and simple. Iloilo City wants electricity, if that will come from hell or the coal plant; we do not care. Meaning, the Ilonggos has a lot of money to pay for electricity. So why are those who were in the frontline in support of the coal plant now complaining of its expensive electricity?

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