VECO and CPPC: Cebu's interest is paramount!

I was dismayed to read the local headlines that a serious power shorting was in the offing in Cebu, thanks apparently to the expiration of the contract between the Visayan Electric Company (VECO) and the Cebu Private Power Corp. (CPPC), which expires at high noon tomorrow. Hence today, we can expect a full day of long drawn negotiations between the two power companies. Call it a real power struggle; after all, it is between two power companies one supplies power, the other distributes it to its service areas! Of course, everyone is caught in the crossfire, alarmed that all of the sudden this problem would drop a monkey wrench on Cebu's economy.

Frankly speaking, we knew of this problem years back when CPPC then threatened to shut down its operations, which would have allowed CPPC to charge higher rates for their continued supply. That was in the year 2003. A year later, there's a new management team in VECO that CPPC has to negotiate. My good friend CPPC General Manager Roger Lim apparently accused VECO of refusing to negotiate an extension of its contract; hence, we're headed towards this potential power crisis.

On the other hand, I got an emailed copy of a letter to Mr. Augusto Villareal of CPPC from an equally good friend, VECO Pres. Dennis Garcia. Allow me to reprint that portion. "We wish to set the record straight: Contrary to your allegation on the refusal of VECO to negotiate and execute an interim agreement, VECO responded to your letters of October 6 and 18, 2005, agreeing to a November 8, 2005 meeting for the purpose of negotiating with CPPC. As a matter of fact, such meeting materialized on November 8, 2005. Moreover, numerous conversations between officials of VECO and CPPC were held prior and subsequent to such November 8, 2005 meeting."

What's the bottom line here? Clearly, it is a matter of each one protecting each other's business interest. We can understand why CPPC has to shut down its operations; after all, it cannot continue to operate unless it is covered with contracts. On the other hand, the management of VECO too has to protect its business interests, that paying more for CPPC's power rates would hurt its financial bottom line, but more importantly, they have to protect the interest of their power consumers in this day and age of E-Vat! The only thing positive I see is that, both companies have a day and a half to go before the power off switch is thrown, and that means more intense negotiations should be happening today. Plus, VECO can always negotiate with the National Power Corporation (Napocor), but whether Napocor would restart its mothballed Thermal Plants is a question that is hanging because it may just be more expensive than what CPPC is asking.

Lastly, let me refute my good friend, Roger Lim when he said that their suspension of operations wouldn't affect "the stability and reliability and adequacy of electric power in Cebu City." I just got the figures on this and like it or not, the closure of CPPC will affect our businesses here! I just hope that when the dust settles, we shall see both companies make decisions for the greater interest of the Cebuano power consumers. May I suggest that we hold an intense prayer vigil so that the Holy Spirit would guide these businessmen into a favorable conclusion to this row?

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When I read the headlines of The FREEMAN, which blared, "Power Lack to Hit Cebu!" my thoughts immediately went back to the promise made by National Transmission Corporation (Transco) President and CEO Alan Ortiz who, exactly a month ago, inaugurated the Leyte-Cebu Interconnection Uprating Project and the Cebu Mactan Interconnection Project. These two major projects done by the Arroyo Administration were designed to prevent headlines just like what The FREEMAN came out yesterday so that Cebu would truly enjoy reliable power and more importantly, an excess in supply.

But that's not what's happening here. I immediately texted Mr. Ortiz asking for an explanation and in reply, he immediately called and explained that the Leyte-Cebu Interconnection which was supposed to give 400 megawatts to Cebu is operating at an 80% capacity. This is normal practice, as you never run your engines at full capacity. But he assured me that Transco was prepared to increase its load to 20% but only during peak hours. But at this point, that's the best he can do.

Mr. Ortiz also revealed that Cebu is dependent solely on the Tongonan Geothermal power as the Palimpinon Geothermal power is only serving the entire Panay grid. This gives you an idea that we really need to build that proposed Coal Fired Power Plant regardless of what the environmentalists say. We can only hope and pray that CPPC and VECO would strike a deal.

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