"It jacked up Iloilo’s power system loss."
It now appears that Panay Electric Co. used the wrong formula to compute power system losses. This resulted in high electricity rates for Iloilo.
According to More Power Corp. to which Congress has granted the franchise to serve as Iloilo’s new distribution utility, PECO reportedly asked its allies in the Koalisyon Bantay Kuryente led by Jose Allen Aquino to present before the energy Regulatory Commission using the wrong system of computing the systems loss. This is the amount of electricity lost due to dissipation from old distribution equipment or wires or stolen from pilferage.
More Power claims the system loss presented by KBK was based on the wrong formula and selective reference to ERC resolutions. For instance, Aquino claimed that the percentage of system loss can be culled using the system loss charge in the monthly bill of customers.
To arrive at his overstated systems loss rate of 7.17 percent that More Power allegedly incurred in a month, Aquino used the number in the systems loss charge and divided it against the generation charge.
This proportionality, according to systems engineers, is called the Gross-up Factor, or U, as it takes into account the sub-transmission plus the substation loss, the capped feeder loss, and the actual system loss for the past 12 months.
Based on Aquino’s computation, PECO’s last systems loss for the month of February 2020 would have reached 8.13 percent, a rate much higher than the 7.17 percent that Aquino presented as More Power’s systems loss.
But using the formula used by the ERC and based on the agency’s formal issuances, the system loss cap should be applied only to the distribution feeder loss. In fact, More Power is applying the feeder loss cap of 6.0 percent for 2020, based on Section 2.3.1 of the ERC Resolution No. 20, Series of 2017.
This appears to be a technical issue that most people would understand only with simple false claims by rabble rousers with oligarch masters like what happened in Iloilo City when PECO’s owners, the Cacho clan, partnered with another Ilonggo oligarch company, the Lopezes, to put up Panay Power Corp. This was during the years of power supply crisis created by the supposed incompetence of President Cory Aquino’s energy managers and supply the city’s electricity requirements with the highest power rate ever charged by a utility.
As the company with the monopoly in power distribution, PECO charged what PPC charged it for electricity produced by PPC’s coal-fired power plant which started operating in 1996. Take note that in exchange for securing its own market, the Lopezes gave the Cachos a 30-percent stake in PPC with the Lopezes taking a 30-percent stake in PECO.
This “incestuous” relationship is one of the anomalous corporate practice that Congress corrected with its passage of the Electric Power Industry Reform Act or the EPIRA in 2001 when it banned cross-ownership of power generation companies and distribution utilities.
The ERC, recognizing the potential abuse of this kind of relationship, acted on a petition filed by an Ilonggo group to investigate the overcharging by PECO of the generation charge paid to the Lopezes’ PPC. It found the allegation of overcharging valid, and ordered PECO in 2005 to refund P630 million to Ilonggo consumers.
The record of abusing its power over consumers by virtue of its monopoly in the distribution system shows why PECO did not get back its congressional franchise in 2019 and Congress gave this instead to another distribution utility.
Its lackeys continue its record of lies by insisting the power outages that occur every time More Power conducts a preventive maintenance of the old distribution lines and substations was due to the new utility’s incompetence is galling had consumers and the government not know that PECO did not spend the money it was supposed to have spent to improve the quality of the distribution system.
The Iloilo Economic Development Foundation said one of the systems that PECO should have invested in was a P500-million state-of-the-art switching system that would cut power outages.
In its online narrative, PECO made a correct claim when it installed the region’s most modern switching system in the 1950s under the guidance of its late patriarch Jose Luis Cacho.
Yes, indeed, but it was also the last time PECO put any capital equipment in Iloilo City in place.
