In a letter dated April 15, the Cebu Chamber of Commerce and Industry (CCCI) received a letter from the Energy Regulatory Commission (ERC) in response to its request for the review of Visayan Electric Company, Inc.’s (VECO) power supply agreement (PSA) with its generator company Cebu Private Power Corporation (CPPC) in 2013.
The CCCI had earlier appealed to the Commission to conduct a review on the VECO-CPPC 2013 PSA after finding substantive grounds on alleged anti-competitive behavior in the agreement and that its implementation is contrary to the requirement in the (Electric Power Industry Reform Act) EPIRA that distribution utilities should supply electricity in the least cost.
The appeal further argued that the increase in generation rates for 2020 is largely attributable to the amount of capacity fee being paid by VECO to CCPC, which still includes Capital Recovery Fee (CRF). CRF is the cost for the recovery of capital or investment incurred in putting up the power plant.
The CPPC power plant was constructed by East Asia Diesel Power Corporation for VECO under built-operate-transfer scheme for a fifteen-year cooperation period which ended in November 2013; however, a new supply contract for another 10 years was entered into and approved by ERC.
To date, CPPC capacity fees are passed on to VECO consumers amounting to roughly P66million a month, on top of the generation cost. CPPC’s per kWh rate ranged from P26 to P1,470.92 per kwh in 2020.
These allegations will be addressed by VECO in a virtual conference set by ERC on April 26, with CCCI in attendance.
Cebu’s electricity has always been one of the most expensive power rates in the country. In an ERC press release dated December 28, 2020, Chairperson and CEO Agnes VST Devanadera provided the range PhP3.9513/kWh to PhP5.0985/kWh as November 2020 generation charge by DUs in Luzon and Visayas, the highest range belonging to VECO.
Identifying electricity as a major cost driver and as one of the top obstacles in the ease and cost of doing business, the CCCI has been a staunched advocate of reasonable power rates in Cebu since 2019.
For more information on CCCI’s power advocacy, one may email at email@example.com.