Negros Oriental PB denies endorsement of firm's power rate hike

DUMAGUETE CITY, Philippines — The Korea Electric Power Corp. (KEPCO), supplier of power to the Negros Oriental Electric Cooperative II (NORECO 2), has failed to get an endorsement from the Provincial Board in line with its application at the Energy Regulatory Commission to increase its rates.

Heated discussions on the matter took place during the joint committee hearing of the PB committee on commerce and trade, chaired by PB Member Clyde Clayborne Lim, and environment, natural resources and energy committee, headed by PB Member Erwin Michael Macias.

Among those who attended the hearing were KEPCO assistant marketing manager Julius Christian Reyes and NORECO 2 engineering division head Chito Lozano.

Reyes explained KEPCO could not implement the amendment of the power sales contracts with all the distribution utilities in the island of Negros without the approval of the ERC and a certification receipt from the PB, in the case of NORECO 2.

Reyes admitted that the amendment on the price contract stemmed from the increase in the cost of coal supply from Indonesia, from US$52.57 to US$63.52 per metric ton, resulting in the firm's losses of close to P1 billion.

Due to the objection of the PB committees over KEPCO's bid, Reyes said his company will have to execute an affidavit of service to prove that the PB was furnished a copy of its application then leave the matter to ERC.

PB Member Arnie Teves and other committee members meanwhile slammed Lozano for issuing earlier allegedly untruthful statements saying that reduction of rates will result when KEPCO's application is approved.

Teves challenged NORECO 2 instead to withdraw its contract with KEPCO because cheaper power can be had with Green Core, which is the provider of geothermal power in the province. "Why force the issue with KEPCO?" he said, adding that if they claimed business is losing, "there's no reason to proceed with it."

Teves further requested NORECO 2 to submit its financial statements and other operations data to the PB, which in turn will be able to see the possibility of reducing its expenses so as not to prejudice the end-users.

Lozano explained that if the application for increased rates is approved, NORECO 2 can file counter-proposal to lower the quantity of its contract with KEPCO, from 16.4 to 8.2 megawatts, thus avoiding excess power from the power supplier.

KEPCO's proposal is to increase the rates by 26 centavos per kilowatt hour for coal, but with the counter proposal to reduce the contracted power supply, it stands to gain 40 to 50 centavos per KWH, Lozano said.

During off peak from 10 p.m. to 6 a.m., NORECO 2 has excess power of 8 megawatts from KEPCO, which is sold to the spot market at a lower price. However, the PB said it was ironic why NORECO 2 buys more power during peak house at a higher price.

Vice Gov. Eduard Mark Macias, who attended the hearing, said the provincial government has all the reasons to be apprehensive about KEPCO's application for higher rates, saying he could not understand why Negros Oriental, as host of geothermal power, is paying for higher rates than the rest of the region even with explanations on the economies of scale. (FREEMAN)