Paid for and yet never delivered: Visayas consumers are owed bill credits

A family in Bohol does not pay for “available capacity.” It pays for electricity, and for the reserves and transmission meant to keep it flowing. Those charges are clearly billed, paid for, but not delivered.

At the House technical working group hearing on systems loss, the NGCP’s representative told us there were no grid integrity problems, and that the reserve market had supplied what NGCP needed and yet, on Sept. 4, NGCP held the Visayas under a nine-hour red alert and listed some 32 cooperatives and utilities for manual load dropping.

Reserves that were paid for

By NGCP’s own definition, a red alert means supply cannot cover both demand and the grid’s regulating requirement. And yet, the reserves were not there. The ERC counted 652 hours of red and yellow alerts in the Visayas in August. Yet the nationwide ancillary services rate rose from P0.7941 to P1.0391 per kilowatt-hour in the July billing period, a 30.85 percent jump carried into August bills, PhilSTAR reported.

Congestion that was paid for

The Visayas is joined to Luzon and Mindanao by direct-current links. These links are supposed to facilitate electric current flows to stabilize power needs through the islands. But the reality is, when a link fills, prices split and the Visayas pays more. On Aug. 13, the ERC found that the spot market’s pricing model mishandled exactly those moments, inflating line-rental charges borne by Visayas consumers, as PowerPhilippines reported. It suspended the collections and ordered an audit back to June 26, 2021. The surplus, it found, had gone to participants that bore none of the congestion cost; the recomputation should take it back from them. ESAMELCO estimated these charges cost Eastern Visayas consumers P1.55 billion since January.

Replacement power that was paid for

Fairness requires saying that NGCP is partly right: the first cause is generation. As of Sept. 8, it reported 29 Visayas plants on forced outage and 14 derated, 786.4 MW unavailable, one unit idle since 2021. But a failed plant still costs consumers money: its utility must buy replacement power, and Visayas distributors run up far higher line-rental charges when contracted plants go offline. Beyond the outage allowance in a supply contract, that cost belongs to the generator and not NGCP.

Name the payer

So who must make the refund? Ancillary services are a pass-through: NGCP collects the charge and remits it to the reserve providers, earning no return on it. The refund must come from those providers, under the performance terms of their agreements and through settlement for capacity bought in the reserve market. Where NGCP, which is also the system operator that certifies delivery, paid for reserves that never arrived, that cost is its own to absorb. There is precedent: in 2024 the ERC released reserve market payments only after NGCP named the non-compliant generators. Cooperatives are conduits, not obligors. And the money must reach the bill, not stop at the market: as Nasecore told the ombudsman, a WESM credit is not yet a consumer refund.

A moral and legal imperative

The moral case is simple: a household that sat in the dark through a nine-hour red alert should not also pay for the reserves meant to prevent it. In his State of the Nation Address, President Marcos stated the principle: “Hindi naman kasalanan ng konsyumer kung bakit nagkaroon ng system loss, kaya hindi naman tama na kailangan sila pa ang pagbabayarin dito.” What holds for system loss holds for any service billed and never delivered.

The legal case is as clear. Article 22 of the Civil Code requires the return of anything acquired at another’s expense without just or legal ground. Section 2 of EPIRA makes protecting the public interest in the rates and services of electric utilities a state policy. And the Supreme Court has ordered this remedy before: in Republic v Manila Electric Company (2002), excess charges were to be refunded or credited against future consumption.

It is therefore clear that there must be an accounting of the reserves needed, purchased and dispatched, with the ancillary rates computed per month. The generator of the power must also be made responsible for the costs beyond the allowable outages. Most importantly, the over-payments must be returned and credited to the people’s billings. They are due it for payments for services that never arrived.

None of this needs a new agency or a new appropriation. The credits come from those who failed to deliver, not from the budget, and the first can reach Visayas bills within 12 months. If PBBM wants an easy win, this is it. In one directive alone which he can give the DOE and ERC, he can address an injustice and rectify it now.

*   *   *

Arthur Yap is Murang Kuryente party-list representative and vice chair of the House committee on energy.