WV electric cooperatives promise lower rates by June

By Joseph Bernard A. Marzan

Power distribution utilities (DUs) in Western Visayas committed on Monday, May 27, to reducing power rates next month, attributing the recent increase to extreme heat conditions and lack of government action.

Atty. James Balsomo, general manager of Iloilo Electric Cooperative (ILECO) III, said the rate rise was due to increased electricity demand during the ongoing El Niño phenomenon.

Data from ILECO III showed a 16.94 percent increase in demand, from 25,963 kilowatts (kW) in February to 27,389 kW in March and 30,360 kW in April. Consumption also rose by 25.18 percent in the same period, from 13.39 million kilowatt-hours (kWh) in February to 13.61 million kWh in March and 16.76 million kWh in April.

The increased demand and consumption heightened their reliance on the Wholesale Electricity Spot Market (WESM), where prices surged from P6.55 per kWh in February to P12.02 per kWh in March and P15.73 per kWh in May.

This situation was compounded by yellow and red alerts from the National Grid Corporation of the Philippines (NGCP), indicating a thin supply-demand margin and a supply deficiency, respectively. In April alone, there were 71 yellow alerts and 23 red alerts in the Visayas.

Western Visayas, being at the tail end of the Visayas grid and without connections to the Luzon grid, experienced a thinner grid supply compared to its neighbors, exemplified by the massive grid-related power outages in April 2023 and January 2024.

“Insofar as ILECO III is concerned, the increase in demand varied among DUs, depending on the class of consumers. With a majority of our consumers being residential, the heat index drove up demand as no one wanted to stay at home without comfort,” Balsomo said during a press conference hosted by the Electric Cooperatives Association of Region VI, Inc. (ECAR-VI).

He added that the steep rise in demand in April was unexpected, prompting early advisories and pamphlets warning consumers of the potential bill increase.

Balsomo also explained that the rise in April bills released in May was due to the ‘forward sale’ system in the power market, where DUs pay generators ahead and recover costs from consumers later. This sometimes necessitates loans to cover power bills, posing challenges for electric cooperatives.

With rains gradually returning to the region, Balsomo said this might signal a decrease in demand and consumption. Combined with a significant reduction in WESM prices, which averaged P8.48 per kWh in May, consumers could expect a rate cut of around P1.00 to P2.00 after taxes.

“This is temporary due to the extended El Niño, which is beyond our control. As the weather normalizes, so will our consumption and market situation,” he said. “Based on our monitoring, we expect a steep drop in power rates by June.”

Shirley Laurente, general manager of the Guimaras Electric Cooperative and ECAR-VI president, reiterated that they were not happy with the rate rise and have been engaging in competitive selection processes for power supply contracts, awaiting government approval.

“The only way to lower generation costs is through contracts with power suppliers at lower rates, which the Panay-Guimaras Power Supply Consortium, Inc. initiated early last year. We are still waiting for regulatory approval to proceed,” she said.

ILECO II general manager Jose Redmond Eric Roquios noted that it could take 6 to 12 months for regulatory bodies to approve these contracts, pushing them to enter Emergency Power Supply Agreements (EPSA) with power suppliers in the interim.

Meanwhile, Engr. Miguel Paguntalan harked back to the past when cooperatives’ rates were cheaper than that of private DUs, saying that the latter “already got what they wanted.”

Apparently, Paguntalan was alluding to MORE Power that has been allowed by congressional fiat to expand to areas served by the ILECOs.

He said the rate increases are beyond their control due to market forces they cannot control.

Data from the Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA), which is composed of electric cooperatives, indicated that MORE Power still has the lowest rate in Western Visayas. (See banner story)