ERC move to cut Visayas power rates

CEBU, Philippines — Power rates in the Visayas are expected to decrease after the Energy Regulatory Commission (ERC) ordered the suspension of the erroneous collection of excessive Line Loss and Congestion Cost (LLCC) charges, an opposition lawmaker said yesterday.

“We expect to see lower power rates in the Visayas, and refunds to consumers who saw their electricity bills surge by anywhere from P2 to P5.99 per kilowatt-hour because of the erroneous pass-on of excessive LLCC charges,” House Minority Leader Marcelino Libanan said.

The relief came after the congressman, a native of Eastern Samar, raised concerns over the exorbitant LLCC charges

during the August 11 hearing of the House committee on energy, which was attended by officials from the ERC and the Department of Energy.

The Eastern Samar Electric Cooperative Inc. (Esamelco) sought Libanan’s assistance over what it described as “rapidly increasing LLCC charges” through the Wholesale Electricity Spot Market (WESM), which had become a “significant financial burden” on consumers in the region.

Based on estimates and projections by the local electric cooperative, excessive LLCC charges passed on to consumers in Eastern Visayas, or Region 8, had accumulated to about P1.55 billion since January this year.

“The oppressive LLCC charges constitute an added burden on electricity consumers, many of whom are already struggling with rising living costs and finding it increasingly difficult to provide for the basic needs of their families,” Libanan said.

“Consumers should not be made to shoulder the cost of the electricity market’s defective pricing and settlement system. If consumers were overcharged, they deserve to get their money back,” he added.

LLCC, or Line Loss and Congestion Cost, is essentially the same charge that the ERC refers to as the “Line Rental” charge.

The charge is intended to cover two basic costs involved in delivering electricity: power lost as electricity travels through transmission lines and the additional cost incurred when transmission lines become congested and cheaper electricity from another area cannot be delivered.

In simple terms, LLCC is supposed to reflect the actual cost of moving electricity from where it is generated to where it is consumed.

On August 13, the ERC ordered corrective measures after finding that the WESM had incorrectly calculated the congestion component of electricity prices in certain situations. This resulted in Line Rental or LLCC charges that were higher than they should have been, particularly when the high-voltage direct current (HVDC) links connecting Luzon, Visayas, and Mindanao became constrained.

The ERC said the problem was not primarily with the formula for distributing market surpluses but with the way the WESM pricing model calculated electricity prices when the HVDC links reached their transmission limits.-