ERC defends Panay electric cooperative

Energy Regulatory Commission (ERC) chairman Rodolfo Albano Jr. has dismissed allegations that Panay Electric Co. (PECO) should be blamed for the possible power outages in Iloilo.

Albano was reacting to reports that Panay Power Corp. (PPC) will likely shut down its operation on Dec. 15 because of the ERC’s decision on PECO’s unbundling rates application, pegging its generation rates to National Power Corp. (Napocor) rates.

He said the ERC, in its May 19, 2004 unbundling decision, approved a rate for PECO which was 2.0427 percent lower than its existing average rate.

The ERC chief said the decision is mainly due to the pegging of its generation rate to P3.7491 per kilowatthour (kwh) which is Napocor’s Visayas grid rate.

PECO and PPC have an existing power purchase agreement (PPA) approved by the then Energy Regulatory Board (ERB) on March 20, 2000.

Albano noted that the PPA provides that "PPC rate to PECO shall be equal to or less than the Napocor or other bulk power producers in the grid".

It is also stipulated in the contract that "in the event that PPC’s rate is no longer competitive, the parties shall conduct mutual discussion to resolve or minimize PPC’s non-competitiveness."

"Up to such time when the ERC came out with its May 19, 2004 decision on PECO’s unbundling, no renegotiated PPA was submitted to ERC for approval. Thus, the commission has no other recourse but to peg its generation rate to that of the Napocor, consistent with the provision in their ERB-approved PPA," Albano said.

He said the PPC and the PECO should have anticipated this kind of problem way before.