VECO may be fined for high power cost

MANILA, Philippines — The Energy Regulatory Commission (ERC) should demand a refund if a violation has been committed by the Visayan Electric Company (VECO) because of its high cost of electricity, a lawmaker said.

Sen. Sherwin Gatchalian cited the Jan. 4 directive issued by the ERC to VECO demanding an explanation on the high cost of electricity.

In the directive, the power regulator said that from January to October 2020, the power purchases made from Cebu Private Power Corp. (CPPC) averaged at P35.3853 per kilowatt hour (kWh), with generation rate spiking significantly high at P1,470.90 per kWh for the month of September last year.

Gatchalian said if VECO, the country’s second largest power distributor, is proven to have committed a violation, it should be ordered to refund to customers.

He also said that the ERC’s mandate is to protect the interest of consumers especially if there are market abuses committed.

The senator also took note of Section 23 of the Electric Power Industry Reform Act (EPIRA), specifying that distribution utilities (DUs), VECO included, have the obligation to supply electricity in the least cost manner to its captive market.

CPPC is just one of the four independent power producers (IPP) supplying the energy requirements to VECO. The other three are Green Core Geothermal Inc. (GCGI), Cebu Energy Development Corp. (CEDC) and Therma Visayas Inc. (TVI) whose power purchases averaged only at P5.5584 per kWh, P4.8922 per kWh and P5.6821 per kWh respectively, from January to October 2020.

ERC chairperson and CEO Agnes Devanadera directed VECO to explain its high electricity rates last year and its perceived violation of Section 45 (b) of the EPIRA, which provides that “no participant in the electricity industry or any other person may engage in any anti-competitive behavior including, but not limited to, cross-subsidization, price or market manipulation, or other unfair trade practices”.

The ERC acted on the complaint made by the Cebu Chamber of Commerce Inc. (CCCI) last December, coursed through the Regional Development Council in Central Visayas (RDC-7), claiming that the high cost of electricity is proving to be a major stumbling block in boosting the business competitiveness of the region.