CEBU CITY, Philippines — The Cebu Chamber of Commerce Incorporated (CCCI) is seeking the intervention of the Regional Development Council in Central Visayas (RDC-7) to make the Visayan Electric (formerly VECO) explain the high cost of electricity in the region.
The CCCI said that the high cost of power is becoming a hurdle of the economic competitiveness of Cebu City, it being one of the top three obstacles for the business community as a whole.
If the cost of power is reduced, it will improve the production in the city thereby boosting the business sector’s competitiveness.
According to the research of CCCI comparing the data of all power utilities in the country, Visayan Electric ranks as one of the most expensive power distributor in the country and the third biggest distributor as well.
The electric company collects P11.0425 for every kilowatt per hour (Kwh) for residential distribution with a minimum generation rate of P5.2934 for every Kwh.
The CCCI alleged that Visayan Electric has violated certain sections of the Electric Power Industry Reform Act (EPIRA) because of co-ownership issues where they sourced more than 50 percent of its total power demand from associated firms contrary to the provisions of the law.
The electric company are said to have purchased its supply from VECO-affiliated companies at higher prices even if other non-affiliated independent Power Producers and the Wholesale Electricity Spot Market (WESM) were significantly cheaper at those points in time.
“This results in unfair prices for consumers in Cebu,” said the CCCI in their letter to RDC-7.
The CCCI also noted that the VECO consumers have long paid for the power plant build by the Cebu Private Power Corporation (CPPC) under a Build-Operate-Transfer (BOT) scheme in 2013.
The company should have turned over its ownership, such that consumers would no longer be paying for capacity fees of P66 million per month, but only for a fixed Operations and Maintenance costs estimated at P12 million monthly.
Instead, the electric company was instead granted another 10-year supply contract by the Energy Regulatory Commission at P6.48 billion in the next 10 years.
The CCCI has been appealing to Visayan Electric and the ERC to reduce the cost of power in Cebu since November 2019, but a year has passed and there has been no respond to this appeal.
With this, the CCCI, through the Economic Development Committee (EDC), has asked the RDC-7 to intervene on this matter.
EDC Chairperson Virgilio Espeleta said that RDC-7 should ask the Anti-Red Tape Authority (ARTA) to compel the ERC to answer the letters and issues raised by the Cebu Business Community.
The RDC-7 should also reques the ERC to review the competitiveness of power rates of all regional distribution utilities including VECO, CEBECO, and MECO.
A request should also be made to the Philippine Competitive Commission to check the potential violation of Visayan Electric on the EPIRA law.
The CCCI also appealed to the RDC-7 to compel Visayan Electric to be more transparent on the buying and pricing formula, to divulge contracts, and practice competitive biddings.
Finally, the EDC proposed that this matter be brought to the Office of the Presidential Assistant to the Visayas (OPAV) so Secretary Michael Dino can help come up with a collaborative plan to reduce the energy cost.
“We want a forum to address this, we are seeking for an intervention,” said Espeleta.
RDC-7 Chairperson Kenneth Cobonpue said the council already wrote to ERC on the matter a few days ago and to date there has been no reply.
Secretary Dino is already calling a meeting with the business sector and the Visayan Electric scheduled later this week.
“This is a matter now that the RDC wants to raise to the national government,” said Cobonpue.
League of the Municipal Mayors in Cebu President, Liloan Mayor Christina Garcia-Frasco, urged the council to hear out the Visayan Electric’s side prior to approving the resolutions.
She clarified that she supports the move to lower the cost of energy, but the company has to be given a chance to explain their side.
Still, RDC-7 approved the resolutions of the EDC, but Cobonpue said that before the council sends out all these appeal, they should wait for the result of the intervention planned by Secretary Dino later this week.
As for Visayan Electric, President and Chief Operation Officerm Engineer Raul Lucero said they are willing to face the business community regarding this matter.
“Visayan Electric will continue to answer the queries of the business sector as we have done in the past. We are committed to make all sectors understand how the electric distribution industry works,” he said.
/bmjo