October 17, 2004


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Beneco helpless over NPC, Transco power rate hikes

Consumers at the losing end

BAGUIO CITY (Oct. 15) — General Manager Gerardo Verzosa announced this week in their office that BENECO (Benguet Electric Cooperative) cannot do anything but to pass on the National Power Corporation (NPC) and the National Transmission Corporation (Transco) generation and transmission rate increases to consumers.

Effective September 26, an additional P1.49 per kilowatt-hour was added to the P4.41 rate for residential consumers. Bills this October will thus charge P5.91/kwh rate.

“Maganda ang timing ng announcement n’yo,” (Your announcement came in perfect timing) City Councilor Edilberto Tenefrancia said, sarcastic at the announcement that consumers are left with no option. Tenefrancia also questioned BENECO for buying from NPC when it could buy power from smaller power producers at a cheaper price. He also hit the NPC for selling power at a higher price saying “it is contrary to the economics of scale”.

BENECO gets more than 95% power from NPC and the independent power producer (IPP) Mirrant. The rest comes from Hedcor and Normin that sell at a lower rate, and La Union Electric Cooperative (Luelco) that sells at a higher rate.

On September 3, the Energy Regulatory Commission (ERC) approved the new generation rates of P0.98 per kilowatt-hour nationwide that energy consumers here and elsewhere have to put up with. In Luzon, the approved amount is P1.23. Adding to this are the approved increases in transmission charges which are at P1.12 per kilowatt-hour.

EPIRA is the culprit

Earlier this week, Engr. Melchor Licuben, BENECO’s customer service manager, explained to leaders of the Metro Baguio PRO-CONSUMERS that the series of power rate increases is due to the pass-on costs by Transco and NPC.

Licuben said that BENECO is just acting as a collection agent, saying that around 77% of its total collections are remitted to both Transco and NPC. Only 23% is left with the distribution utility for its operations.

Chie Galvez, PRO-CONSUMERS convenor and Tongtongan ti Umili secretary general, puts the blame on the Electric Power Industry Reform Act (EPIRA) passed in 2001 as a result of the government’s globalization-driven economic policies. She said that the privatization of NPC assets and its contracts with independent power producers at the time of the Ramos administration failed to address the power industry’s problems that it is now passing on the burden on the energy users.

“Dapat ipawalangbisa ang mga kontratang iyon sa IPPs at ang mga natitirang kontraktor sa enerhiya ay kunin na ng gobyerno at huwag bayaran ang mga pagkakautang sa mga ito dahil hindi naman nakinabang ang bansa rito,” (The government should quash its contracts with IPPs and the remaining ones be converted into government assets. Since the country did not benefit from the contracts, the remaining debts should be written off) Galvez airs the consumers’ stand. “It is high time that government addresses the energy needs of the people, after all, it is a basic need and not a commodity that must be left in the hands of businessmen,” Galvez maintains.

Time of use scheme

In the same conference, NPC’s Power Economics Department Manager Urbano Mendiola, Jr. presented the time of use (TOU) concept which may be availed of by NPC customers. A result of the full implementation of the EPIRA, TOU rates, Mendiola said, would help customers and the end-consumers to determine the power rates to be applied to their energy consumption. He said that power rates could be as low as P1.82 at off-peak hours to as high as P5.91 peak rates per kilowatt-hour.

Mendiola recognized the need for a change in consumption patterns and eventual change in lifestyle in order to maximize the TOU rates. He said that for end consumers to avail of the rates, the electric distribution utility such as BENECO should apply for a TOU.

Verzosa, however, said that BENECO cannot provide electronic meters to all the 103,000 energy users in Baguio and Benguet. A three-faced meter to monitor hourly usage would cost P22,000.

“It is possible for NPC to read BENECO’s five meters at its distribution outlets, but it is quite unimaginable to monitor the end-users’ consumption,” Verzosa said. He added that although it could simulate its consumption, it could not ascertain each household’s usage.

Reduction of Subsidies

Meanwhile, the reduction in power interclass cross-subsidies, which also takes effect this month, will further increase the power rates. NPC Consultant Alberto Reyes III explained that the subsidy reduction program runs up to 10 years, the lifeline consumers coming at the end of the line.

Samahan ng Nagtataguyod ng Agham at Teknolohiya para sa Sambayanan (AGHAM) criticized the subsidies given by power utilities and the government, saying they collect from one class of consumers to cover the discounts for another class.

“It is the consumers themselves who are helping each other all along,” AGHAM said in a statement. Consumers will have no respite from increases in the electric bills, it read. # Lyn V. Ramo for NORDIS

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