VECO hikes rate

CEBU, Philippines - The Visayan Electric Company Inc. yesterday announced that consumers will have to brace for an electricity rate increase starting in their bill covering the period from April 11 to May 10, 2011.

But VECO spokesperson Ethel Natera told The FREEMAN that the increase would be less than what was approved by the Energy Regulatory Commission (ERC).

The ERC had approved an electricity rate of 0.6060/kwh as petitioned by the National Power Corporation and Power Sector Assets and Liabilities Management Corp.

Natera said VECO only sourced about 30 percent of its power needs from Napocor while the rest is from the Cebu Energy Development Corporation, Green Core Geothermal Inc. and the Cebu Private Power Corporation.

“Definitely, the increase would be less than what was approved by the ERC. We have a probable amount but the final amount will depend on the Napocor bill,” Natera said.

VECO, the second largest electric utility in the Philippines, serves the cities of Cebu, Mandaue, Talisay and Naga and the municipalities of Liloan, Consolacion, Minglanillla and San Fernando. Its franchise area covers about 674 square kilometers with an estimated population of 1.73 million.

Natera added that they are still awaiting the Napocor’s bill, which would normally arrive in the first week of the month.

On March 26, the ERC allowed Napocor and PSALM to recover, under the Generation Rate Adjustment Mechanism (GRAM) and Incremental Currency Exchange Rate Adjustment (ICERA), their incremental fuel and purchased power costs, and foreign exchange costs incurred from January 2007 up to April 2010.

Aside from the Visayas, Luzon and Mindanao will also have an increase in power rates by 0.6904/kwh and 0.0442/kwh, respectively.

According to ERC, the GRAM and ICERA rate adjustments took effect from the March 26 to April 25, 2012 billing period and will continue until the Deferred Accounting Adjustment (DAA) amounts will be fully recovered.

ERC Executive Director Francis Saturnino Juan said that these fuel, purchased power, and foreign currency costs are legitimate costs incurred by Napocor and PSALM.

He explained that by law, the petitioners are entitled to recover these costs as part of the price of electricity they sell to their customers.

Juan added that the ERC has already mitigated the impact of these adjustments by spreading the recovery over a longer period.

The Freedom From Debt Coalition-Cebu said that ERC’s approval of the applications filed by Napocor and PSALM signals the expected spate of power rate increases.

Aside from the .60 centavo increase for Visayas under GRAM, Napocor and PSALM still have pending applications for rate increase for the recovery of stranded debts and contract costs.

Through GRAM, any increment in the prices of fuel, purchased power and exchange rate fluctuation will be passed on to consumers.

FDC-Cebu secretary general Jose Aaron Pedrosa said that in effect, power players are guaranteed good business returns while consumers are made to bear the costs. -/LPM  (FREEMAN)