The shortage of power supply caused increases in residential effective electricity rates since January, with June power rates having the highest average increase at P1.3037 per kilowatt hour among the affected electric cooperatives, the Philippine Rural Electric Cooperatives Association, Inc. said Tuesday.
In a report submitted to the Energy Regulatory Commission, Philreca said more than half of the electric cooperatives in the Luzon Grid (or about 26 ECs accounting for 59.1 percent) confirmed that the rate of electricity rose due to the current power supply shortage.
Kenjie Fagyan, Philreca’s Regulatory Affairs Officer said in a statement the gradual increases in residential effective power rates since January were due to the upward trend of generation costs and forced outages of some power plants supplying the energy requirements of Luzon.
“Some plants have been on forced outage since December until now due to unfinished maintenance or repairs. That is why as early as January, majority of our EC consumers in Luzon experienced increases in power rates in their electricity bills,” Fagyan said.
He said distribution utilities (DUs) needed to buy electricity from the Wholesale Electricity Spot Market (WESM), the trading floor of electricity to address these power outages, and in most cases, electricity from the market is more expensive than the approved rates in the DU’s Power Supply Agreement with the generation companies (gencos).
Janeene Depay-Colingan, Executive Director and General Manager of the 121-member-strong Philreca said these increases in rates are beyond the control of the ECs.
“We should understand that in this case, the ECs are just collection agents of GenCos. The increases that the consumers see in their bills are actually increases in generation charges. DSM charges [Distribution, Supply, Metering] are the fees that are collected by the ECs for the maintenance of the ECs’ operations,” said Colingan.
Colingan said the distribution sector is a regulated industry where the rates have to go through a series of hearings and consultations with the ERC.
“And for years, these rates remained the same—the public can check their bills which show unbundled charges. The generation sector is a competitive industry —any increase coming from this sector affects the total charges that consumers see in their power bills,” said Colingan.
Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA) requires distribution utilities to unbundle the charges in the consumers’ power bills.
Consumers can check how much payment goes to the distribution utility, and how much are pass-through charges like generation rate. Changes or increases in generation charge that cause increases in the overall electricity rate can be seen in the consumers’ power bills, the group said.
Philreca president and Party-List Representative Presley C. De Jesus reiterated his call for the government regulatory and policy agencies to stop finger-pointing and find a way to solve this problem.
“The people are suffering because of someone or some office’s failure to plan and make contingencies on such a perennial problem like this one. Every year since time immemorial, we encounter the same circumstances, and experience the same problem, and yet, we are allowing this to happen,” said De Jesus.
In the most recent hearings of the House of Representatives and Senate of the Philippines, the Department of Energy insisted that there is enough energy supply.
Energy Secretary Alfonso Cusi said that it is the National Grid Corporation of the Philippines’ (NGCP) mandate to negotiate with these power plants for reserves.
NGCP, however, maintained that there is no enough supply to be contracted for reserves.
Amid the raging issue, a legislator from the Bicol region on Tuesday urged the government to set up its own oil reserves to ensure stability in supply and prices.
CamSur Rep. Luis Raymund Villafuerte said “the steady increase in global oil prices worsens the risk of a spike in inflation and exacerbate the economic shocks caused by the protracted coronavirus pandemic.”
Villafuerte recalled that almost two years ago, he already backed the view by Energy Secretary Alfonso Cusi that the country needs strategic oil reserves so the government can be part of the fuel supply chain and have the capability to ease the impact of global market volatilities on consumers by ensuring a stable domestic fuel supply.