Increase 6%, not 41% VECO hike to hit only heavy users

CEBU, Philippines - The Visayan Electric Company hastily called a press conference yesterday to correct a report in a local newspaper (not The Freeman) that Cebuanos were about to be walloped by a whooping 41 percent increase in rates.

Sebastian Lacson, Veco vice president for administration and customer services, said it is not true that the public will be slapped a 41 percent increase in rates since the petition now with the Energy Regulatory Commission is only for a 35-centavo increase per kilowatt hour to be charged on top of their present fixed charge that is P6 per kilowatt-hour for residential consumers.

 For instance, a household that consumes 100kWh per month is presently charged around P600 but with the proposed increase, they will be charged around P635.

However, Lacson emphasized that their petition for rate adjustment before the ERC is not at all disadvantageous to the consumers. He admitted the sought increase will only affect those consuming above 100kWh and those who are consuming less will be charged lesser because their petition also seeks to expand their lifeline rates.

He explained the first intention of their application is expanding the terms of the lifeline rates wherein customers who consume below 100kWh would be granted bigger discounts on generation, transmission, distribution and metering charges.

“This is good news for our 125,000 residential consumers,” he said. The number is half of the total number252,000 residential consumers under the Veco franchise area.

At present, customers who are consuming 0-50kwh are given 30 percent discount, while those who consume 51kwh are given 25 percent discount and those who consume 52kwh are entitled to 20 percent discount in their monthly rate.

Also, those who consume 53, 54 and 55kwh enjoy 15, 10 and five percent discount respectively.

But under the proposed rate adjustment of Veco, consumers that consume 0-20kWh per month would be given 100 percent discount, or they do not have to pay for their electricity consumption at all. Those who consume 21-50kWh will be entitled to 50 percent discount while those who consume 51-70kWh will be given 35 percent and those who consume 71-100 will be given 20 percent discount.

Lacson explained that the laST time they applied for an increase was still in 2001 and was only implemented last 2004.

He said that in 2000, VECO’s asset rate base was about P2.56 Billion, but in the application of the company, the asset base has increased to P6.41 billion. This means that the asset rate base increased up to 150 percent while its application is a rate adjustment of only 42 percent.

The asset rate base as explained is the appraised value of the assets an electric distribution utility uses in delivering its services to the customers.

Lacson clarified that they are still applying and will not be implemented immediately because they know that it will still be going through a lot of process.

He said the they knew that the ERC is very careful in matters like this because it is a public concern.

But he said they wish to have this approved because it would also be for the benefit of the consumers and that the increase they are asking for would mean that they would have a 12 percent return on their rate base, which is the approved return of investment by law.

“It’s not that we want to increase, it’s what the law is saying so we should make the 12 percent,” he added.

The 35 centavos increase that the company is asking for Lacson explained would go to the return on rate base and for the operations and maintenance cost.

He said that 18 centavos would be for the return on rate base and 17 centavos would go to the increases in operations and maintenance cost which have also increased in price from the year 2000.

Lacson also said that through their proposal, services would be more improved. — /WAB (THE FREEMAN)