VECO says rate increase not to punish consumers

The Visayan Electric Company yesterday said the rate increase they will implement is not aimed to penalize its customers but simply to recover the costs it advanced to Cebu Private Power Corporation to prevent the latter from shutting down.

VECO's area vice president for utility economics Arlo Sarmiento said there is no other way for them to recover the amount they have spent for their supplier but pass it on to their consumers.

He explained that the adjustment in their rate is not a penalty but the actual cost of power, which was advanced by VECO and approved by the ERC.

Sarmiento reacted to the statement of Freedom from Debt Coalition president Michael Enriquez who said the effect of the VECO's rate hike on the power consumers if very big and it would be like penalizing consumers.

On its November 3, 2006 decision, ERC authorized VECO to recover additional costs it spent to prevent shutdown of CPPC in the amount of more than P243 million covering period of December 2005 until July 2006.

The decision allows the power firm to hike its rates by P0.1580 per kWh effective this November through the implementation of the Automatic Adjustment of Generation Rates and Systems Loss Rates or AGRA.

Sarmiento said this translates to P0.9 per kilowatt-hour increase from their last month's rate, or about P27.52 for customers consuming 172 kWh in a month (the average residential customer consumption). At present, VECO charges residential consumers P6.27 per kilowatt-hour of consumption.

Sarmiento said recovery will last only for 12 months or until the recoverable amount is met, after that VECO will again implement its old rates.

He said the continued operation by CPPC is very important because aside from helping them meet their power demand, the power supplier also serves as a backup in the event of a blackout.

ERC also said that CPPC operated at a loss for quite some time and if it ceases operating, a power crisis may happen over Cebu that could also affect the entire Cebu-Negros-Panay grid.

Meanwhile, VECO yesterday signed a memorandum of agreement with the Philippine National Oil Company-Energy Development Corporation for the 15 MW five-year energy supply contract.

Under the contract, PNOC-EDC will sell 133 gigawatt hours of electricity annually to VECO from Northern Negros Geothermal Power plant starting February 2007.

VECO president and vice-chairman of the board Dennis Garcia said the agreement is very important for VECO because the additional power supply would mean reliability to VECO's system.

"VECO will continue to look for ways to provide best quality of service to our customers," he said adding they are looking forward for more agreements with PNOC-EDC in the future for additional power supply.

PNOC-EDC vice president for operations Marcelino Tongco said the agreement is very vital because "it marks our entry into competitive power market business."

Formerly, he explained that PNOC-EDC is only involved in development of geothermal steamfield and sale of steam for the plants of National Power Corporation.

With the contract, PNOC-EDC will become another VECO's power supplier aside from the National Power Corporation, Toledo Power Corporation, CPPC and East Asia Utilities Corporation. - Wenna A. Berondo