WHY SHOULD WE SUFFER?: Business, political leaders ask ERC to intervene in power rate hike

By Francis Allan L. Angelo

Political and business leaders in Iloilo City called on the Energy Regulatory Commission (ERC) to intervene in the increase in electricity rates caused by the damaged submarine cable of the National Grid and Power Corp. (NGCP).

In a letter to ERC chairperson Agnes VST Devanadera dated Sept 9, 2021, Mayor Jerry Treñas said the damaged submarine cable of NGCP in Amlan, Negros Oriental caused by dredging works of the Department of Public Works and Highways will have a bad effect on power rates in the city.

Treñas said the city enjoyed the lowest rate in the country at P6.45/kilowatt-hour (kWh) for residential customers and even lower for our commercial and industrial rate classes courtesy of MORE Electric and Power Corp.

“We were elated and we realized then that the City was right in supporting MORE Power all along. However, in the billing for August 2021, rates in the City increased by P 1.55/kWh to an average of P7.99/kWh for residential customers. Furthermore, I was informed by MORE Power president, Roel Z. Castro that it will further increase to a rate of around PI0/kWh for the September 2021 billing,” the mayor added.

Dredging operations of the DPWH along Bio-os River in Barangay Jagna, Amlan in Negros Oriental on June 15 damaged one of the two cables connecting Cebu and Negros, thereby reducing the capacity of the interconnection by 50 percent. This caused congestion in power flow in certain hours of the day especially during the evening peak and drives electricity prices higher during those time intervals.

“In the interest of all electricity consumer’s in our region, especially those in Iloilo City, I am appealing to you madam chairperson for a swift and decisive action to resolve this problem. This may be in the form of regulatory intervention in the pricing mechanisms of the energy market or mandating NGCP to resolve the problem with the submarine cable at the soonest. Your swift action on this matter is the only way to restore normalcy and stability to the power supply of the City and the Region as a whole both in terms of pricing and reliability,” Treñas said.

The Iloilo Business Club headed by Juan Jose Jamora III also urged Devanadera to “urgently look into this matter and provide immediate regulatory intervention to ensure llonggo consumers do not suffer from the consequences of this incident especially at this time of the pandemic.”

“The swift resolution of this problem will go a long way in our business operations as we try to save on costs and work towards economic recovery,” the IBC added.

The Iloilo Economic Development Foundation, Inc. (ILEDF) also appealed for a swift and decisive action on regulatory intervention on the Negros high voltage submarine cable damaged during the DPWH re-channeling activities.

“The damage has affected the power rates of MORE Electric and Power Corporation (MORE Power) which were recently brought down to Php 6.45 per kWh last July 2021. Recently, the power rates increased by Php 1.55 per kWh in August 2021. MORE Power is expecting further increase to Php 10.00 per kWh in the September 2021. It is unfortunate that this happened at such a crucial time when electricity is critical to COVID-19 response efforts. While the NGCP and DPWH assure their stakeholders that all hands are on deck to restore the affected facility and mitigate the impacts, we would like to appeal to you to intervene in terms of addressing the power rate issue,” ILEDF said.

Filipino-Chinese Chamber of Commerce of Iloilo, Inc. (FCCCII) said the reduction in power costs was a big help to our SMEs members considering the current pandemic situation.

“We would therefore appeal for your help in whatever form so that the electricity rates in the City of Iloilo would revert back to Php 6.45/kwh and help us navigate the hard times during this pandemic situation,” FCCCII said in a statement signed by its president Vicente Tang.

BLEEDING TO PAY

MORE Power sent two letters to the ERC to seek clarification and guidance on the issue.

In a letter dated August 18, 2021, MORE Power President and COO Roel Z. Castro asked the guidance and assistance of the commission on the July 2021 (Wholesale Electricity Spot Market) WESM Bill of Independent Electricity Market Operator of the Philippines (IEMOP) to MORE Power.

The July 2021 WESM Bill covers the billing period from June 26, 2021 to July 25, 2021.

MORE Power noted that numerous extreme price separations were observed which is attributable to the incident that happened to one of the 2x90MW circuits of NGCP’s submarine cable between Cebu and Negros that limits the flow of power supply between islands.

The limitation in supply was further aggravated by the Preventive Maintenance of Palm Concepcion Power Corp located in Panay Island.

“This extraordinary market condition might extend until next year pending the repair of the damaged submarine cable of the National Grid Corporation of the Philippines.”

In another letter dated Sept 6, 2021, MORE Power said its generation charge “is projected to increase by 76% after hitting a record low of P3.55/kWh in July 2021.”

“MORE Power is bleeding to pay IEMOP a line rental amount of P164.4M, more than twice that of P66.15M from last month. This extreme price hike in WESM is projected to continue until December, pending complete repair of the NGCP’s damaged submarine cable. This means another unbearable four (4) months for the paying consumers just because of the underwater mishap of the DPWH’s operator. Relative thereto, MORE Power would like to respectfully request the immediate attention of the Honorable Commission to urgently look into the burden caused by the damaged submarine cable as this will continuously rip the consumers by paying exorbitant electricity rates.”

The distribution utility added that consumers are heavily affected by the sudden increase in rates caused by an extraneous event.

“While MORE Power is succumbed to pay an extortionate amount of line rental, it is certain that generators savored the triumph of receiving huge amount from their WESM bill. While consumers wallowed in grief because of the increasing monthly electricity bill, DPWH’s dredging operator is just wandering out there, free of guilt. While we acknowledge that price mechanism in WESM is duly approved by the Commission, there are inevitable cases like this that mathematical formulas aren’t the feasible solution to the problem.”

EXPLANATION

The ERC responded by referring the matter to the Philippine Electricity Spot Market Corporation which operates WESM.

In a letter dated Sept 2, 2021, Devanadera cited that the NGCP problem resulted in MORE Power paying Line Rental in July 2021 amounting to hike for its residential consumers.

“Considering that the scheduling and pricing of real-time data, and the billing and settlement procedures are part of the market operation functions, the ERC hereby directs PEMC to provide, within three (3) days from receipt hereof, its input on the inquiry of MORE with regard to the non-imposition of the Price Substitution Methodology (PSM) during the period where issues on the NGCP line were encountered,” Devanadera said.

The PEMC was also directed to submit the following data within the same period:

1. Breakdown of the computation of the Line Rental payments of MORE for the billing month of July 2021 in comparison to the period prior to the submarine cable breakdown and the same period in 2019 and 2020;
2. Breakdown of the computation of the Trading Amount of MORE for the billing month of July 2021 in comparison to the period prior to the submarine cable breakdown and the same period in 2019 and 2020;
3. Final nodal prices of MORE for July 2019, 2020 and 2021; and
4. Breakdown and computation of its PhP17,999,364.20 NSS Allocation in comparison to its NSS allocation prior to the submarine cable breakdown and the same period in 2019 and 2020.