‘DON’T BURDEN THE CONSUMERS’: ERC stops collection of congestion charges

By Francis Allan L. Angelo

MORE Electric and Power Corp. hailed the decision of the Energy Regulatory Commission (ERC) to stop the collection of charges that jacked up electricity rates in Iloilo City and other parts of Western Visayas.

In a letter dated September 20, 2021, ERC chairperson and CEO Agnes VST Devanadera directed the Philippine Electricity Spot Market Corp (PEMC), operator of the Wholesale Electricity Spot Market (WESM) to “stop the collection of congestion and other applicable charges, including but not limited to line rentals.”

The spike in line rentals and electricity rates was due to the damage caused by the contractor of the Department of Public Works and Highways (DPWH) on one of the lines of the Cebu-Negros Submarine Cable during its conduct of an amphibious dredging in the mouth of Bio-os River, Brgy. Pondol, Amlan, Negros Oriental last June 2021.

The submarine cable is operated by the National Grid Corporation of the Philippines (NGCP).

The damaged line consequently resulted in decreased transfer capacity of the Cebu Negros Submarine Cable, which led to congestion that limits the available supply.

Consequently, costlier diesel plants have been tapped to compensate for the load required, ultimately setting the marginal costs that define the current pricing in Negros and Panay.

High line rental amounts due to congestion also jacked up prices of electricity.

MORE Power, Iloilo City’s distribution utility, first raised the issue with ERC.

Its complaint, on behalf of its consumers, gained the support of Iloilo City Mayor Jerry Treñas, Iloilo City Rep. Julienne Baronda, the Department of Energy, Iloilo 2^nd district Rep. Mike Gorriceta, along with various consumer and business groups who all aired that it is “too unfair for the consumers to take on the burden that is not of their own making.”

The ERC said the order takes effect “until the complete restoration and operationalization of the said transmission line by the National Grid Corporation of the Philippines (NGCP), or until a more applicable pricing and settlement solution is ordered by the Commission.”

“The Commission is of the view that the congestion and other charges that are attributable to the damage of the Cebu-Negros Submarine Cable, which was not caused by the consumers, should not be charged to them,” Devanadera said.

The ERC also directed PEMC to refund the charges that were already collected from the customers for the billing period of June to August 2021. These charges are the reason why electricity rates of MORE Power and electric cooperatives increased by at least P1 per kilowatt-hour in said months.

The ERC said the refund must be implemented in a period equivalent to the number of months covered by the collections. For illustration, the collection of two months’ congestion and other applicable charges, shall be refunded within a period of no more than two months.

PEMC was also directed to comply with the following:

-Submit to the ERC, no later than September 23, 2021, a detailed report on:

(i) the congestion charges and other applicable charges already collected and paid to affected generation companies and the billing period covered by such; and

(ii) the congestion charges and other applicable charges already billed, but not yet collected and the period covered by such billing;

-Submit an initial progress report to the commission no later than the 30th day of the month following the issuance of this letter directive; and a progress report thereafter, until the full refund to customers shall have been completed in accordance with this directive; and

-publish the above-mentioned directives in the PEMC website and request the concerned Distribution Utilities (DUs) to post the same in their respective websites.

The ERC acted on the matter after learning of significant increases in the electricity rates of consumers in the subject areas have been observed beginning in their June billing.

The significant increases in electricity billings have been decried by many stakeholders in Panay and Negros as an unreasonable burden to consumers and businesses.

“The Commission’s suspension of the collection of Congestion Charges and other charges that are attributable to the Cebu Negros Submarine Cable incident seeks to mitigate the impact of these developments on our consumers in the affected areas,” Devanadera added.

The commission said it cannot agree less to the qualms of consumers on expensive power.

“Specifically, the damaging of the Cebu-Negros Submarine Cable, was not caused by the consumers, but rather by negligence, which responsible parties should be made to account for. As such, the Commission is of the view that the congestion charges, and other charges, that are attributable to the incident, should not be charged to the consumers.”

Since the completion of the repairs as reported by the NGCP is estimated between October 2023 or as late as 26 months from now, the ERC said it is “left with no recourse but to impose measures that will mitigate the impact of these developments on our consumers in the affected areas.”

BACK TO LOWER RATES

In a statement, MORE Power thanked the ERC for heeding its concern and the consumers for joining its cause.

“Once again, this only emphasizes the importance of all of us working in coordination with each other. Indeed, it is only by collective effort that we can easily attain the mission to protecting the rights of the consumers,” MORE Power said in a statement.

The distribution utility will soon announce how to implement the refund to the consumers even as it assured that rates will return to P6.45/kWh.