Visayan Electric terminates supplier contracts to cut costs

CEBU, Philippines —  In its commitment to slash electricity rates, the Visayan Electric has terminated at least three power supply contractors to save costs.

According to Raul Lucero, president and chief operating officer of Visayan Electric, reduction of electricity rates may be felt by consumers starting October 2020. However, the exact percentage of the rate cut in its franchised area is yet to be determined.

Lucero said power supply contracts of Vivant Energy Corp., and Aboitiz Energy Solutions Inc., were both terminated in October 2019 while the contract with the Cebu Private Power Corp. (CPPC) was discontinued in August this year.

Because of this, Lucero said there will be adjustments in electricity rates by October.

With the contract termination, which Lucero referred to as expensive power sources, Visayan Electric is now getting power from Cebu Energy Development Corp., Therma Visayas Inc. and Green Core Geothermal Inc.

He also added that the distribution utility company still has to receive the billing from Wholesale Electricity Sport Market (WESM).

Visayan Electric’s move to find ways to cut electricity rates is primarily triggered by the clamour of the business sector, led by Cebu Chamber of Commerce and Industry (CCCI), that Cebu has one of the most expensive electricity costs in the country.

At present, Visayan Electric is getting its power source from WESM. But because this is a trading venue, rate is volatile.

WESM is a platform for trading electricity as a commodity. Industry participants, such as the generation firms submit offers to sell energy by offering it for sale at a certain price on an hourly basis.

Earlier, Energy Regulatory Commission (ERC) probed Visayan Electric of the alleged high electricity rates.

Visayas Electric’s total contracted capacity now stands at 291 megawatts (MW) while the demand capacity is at 400 MW. It is also managing its exposure in WESM to avoid overexposure as power rates normally go high approaching the winter season.

Visayan Electric’s franchised areas include the cities of Cebu, Mandaue, Talisay, Naga and four municipalities of the greater part of Metro Cebu — Liloan, Consolacion, Minglanilla and San Fernando.