Council wants to know deal with new power sources

CEBU, Philippines - The City Council is requesting the Visayan Electric Company to submit documents relating to the Power Sales Contract that VECO is about to enter into with independent power producers.

The contract with independent power producers is aimed to achieve a long-term bilateral power resolution.

In previous public hearings called by the Council, VECO announced it anticipates an impending increase in the power rate early next year due to the expiration of its contract with the National Power Corporation.

The expiration of the NPC contracts means that the distribution utility has to find another power producer capable of meeting the demands of consumers.

During the hearing, VECO admitted it is on the process of negotiating deals with IPPs so that its operation will not be jeopardized once the contract with NPC expires.

VECO said it is possible that power rates will increase once it purchases power from IPPs because independent producers reportedly charge higher.

NPC charges VECO P3.8 per kilowatt hour, a rate that is already highly subsidized by the national government. By yearend or beginning 2011, VECO’s generation charge can potentially rise to P5.20 per kwh.

Currently, VECO charges consumers P4.4 per kwh for generation cost.

“In the spirit of transparency, the City Council, reiterating the call of Honorable Rodrigo Abellanosa, would like to be enlightened on the rules and limitations governing the power sales contracts entered into by VECO and the IPPs, the specifics of the increase, the amount of the increase and the IPPs involved in the negotiations with VECO,” reads the council resolution.

The council also wants VECO to illustrate “in a comparative manner” and translated to average cost per kilowatt hour the rates offered by IPPs.

VECO Corporate Communications Manager Ethel Natera said they might be able to provide the documents to the Council next week. (FREEMAN)