Group warns of expensive power in Bantayan Island

CEBU, Philippines — The militant group United Filipino Consumers and Commuters (UFCC) has warned that electricity consumers may be set up for price gouging if a power supply contract entered into by an electric cooperative allegedly without proper compliance with the mandatory Competitive Selection Process (CSP) is approved by regulators.

UFCC president Rodolfo B. Javellana, Jr. sought Energy Secretary Alfonso G. Cusi’s clarification of a Bantayan Island Electric Cooperative, Inc. (Banelco) rule that a CSP with only one bid is compliant with the Department of Energy’s (DOE) guidelines. 

The same letter was sent to Energy Regulatory Commission Chairman Agnes Devanadera and National Electrification Administration (NEA) administrator Edgardo Masongsong.

According to Javellana, Banelco’s bid bulletin posted in the DOE website declared: “if there is at least one First Bid Envelope ‘passed’, the Committee shall proceed to publicly open the Second Envelope of the bidder…” 

 "Our position is that a bid of one is not competitive and we have given notice to DOE, ERC and NEA that we will oppose a Banelco contract under those terms," Javellana said in a press statement.

The CSP is conducted under a two-envelope format with the first envelope as the technical proposal and the second the price offer.

The mandatory CSP is a hard-won victory of electricity consumers at the Ombudsman which meted the entire ERC a one-year suspension in December 2017 for giving “unwarranted benefits to Meralco and other companies” and at the Supreme Court in May 2019 when ERC’s extensions of CSP deadline were nullified and Meralco had to subject its supply contracts to CSP. Alyansa para sa Bagong Pilipinas (ABP) filed and won both cases.

In ruling for ABP, the SC said: “public bidding is the most efficient, transparent and effective guarantee that there will be no price gouging by distribution utilities.”

UFCC coordinator Romeo Junia said Banelco awarded a 15-MW, 15-year supply contract to Vivant Integrated Diesel Corp. on October 30, 2019 at a True Cost Generation Rate (TCGR) of P13.30 pkwh, without VAT. The Notice of Award was also posted in the DOE website.

The TCGR charged today by Banelco’s supplier Bantayan Island Power Corp. (Bipcor) is P9.51 pkwh, no VAT. But under subsidized rates that rural electric cooperatives (REC) enjoy, the generation rate Banelco members actually pay is only P6.25, and it is aptly called the Subsidized Approved Generation Rate (SAGR). 

Under Bipcor rates today, the subsidy is about P3.26 pkwh but under Vivant it could rise to more than double at P7.05 pkwh.

The rest of the country’s electricity consumers, according to Junia, are impacted by every REC failure to obtain least cost supply under CSP because the subsidy for the difference between TCGR and SAGR is paid out of the Missionary Electrification (ME) charge that all consumers pay. Today that is P0.1561 pkwh and at a conservative annual electricity consumption of 100B kwh, that is P15.6Billion.

"We pay the price of imprudent contracting thru ME but the coop member is impervious to it because of SAGR," Junia said.

 Junia said that it is the view of UFCC to scrap ME charges and instead get the subsidies paid out of the huge taxes government collects from the utilities.

"Energizing the countryside is a public priority and there is no dispute there but the burden should not be borne by consumers who are already saddled with the most expensive power rates in the region," Junia said.

“About 11% of our monthly power bills go to taxes – and we are even double taxed with the local franchise tax and lifeline subsidies vatted – yet government still compels us to pay for its safety nets like missionary electrification and the lifeline and senior citizen subsidies,” Junia complained.

Bipcor was the other bidder for the Banelco contract but was disqualified because its equipment supplier certificate was not notarized. The second envelope consisting of its price offer was not opened but it has indicated that it will go into a second bid if one is called by Banelco.  FPL (FREEMAN)