No VECO power rate hike this year; slight increase eyed next year
NO significant increase in electricity bills are expected for consumers of the Visayan Electric Company (VECO) this year in spite of increasing oil prices and the Tax Reform for Acceleration and Inclusion (TRAIN) law.
According to Bernard Bailey del Castillo, VECO assistant vice president for engineering technical support, the electric utility cannot go beyond their approved rate given to them by the Energy Regulatory Commission (ERC).
However, he clarified that there is a minimal fluctuating rate on top of their approved rate, which is affected by the volatile prices of oil as well as the higher excise tax imposed on coal under the TRAIN law which is now at P50 per metric ton, from P10, in the first year of implementation (2018). It will increase further to P100 in the second year, and P150 in the third year.
“Usually, the fluctuation is less than P1. So like from P10.5 (per kilowatt hour), it can go to P10.52 or it can even sometimes go down to P10.4,” he explained in a recent interview.
When oil prices also decrease, he said the pattern is that the fluctuating cost on top of VECO’s approved rate also decreases.
But by next year, VECO is scheduled to announce a resetting of their approved electricity rates.
Del Castillo said they are allowed by the ERC to apply for a resetting of their approved rates every four years. Their next resetting is in 2019.
“We will apply based on our new CAPEX (capital expenditure) application because this will form part of the rate base. But it could be an increase or a decrease. There’s that possibility,” he said.
Also, del Castillo assured that whatever rate resetting they will apply for, it will undergo a series of public consultations. And the new rate will have to be approved by the ERC and other government regulators.
VECO, which is the country’s second electric utility next to the Manila Electric Company (Meralco), is owned and managed by Aboitiz Power Corporation and Vivant Corporation. They serve the cities of Cebu, Mandaue, Talisay, and Naga, and four municipalities of the greater part of Metro Cebu, namely, Liloan, Consolacion, Minglanilla and San Fernando.
AboitizPower Executive Vice President and Chief Operating Officer for Distribution Business Group Jaime Jose Aboitiz also said that the impact of TRAIN and the oil price hikes only had “minimal effect” to VECO’s fluctuating rates.
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