Sunstar Bacolod
AN INDEPENDENT VIEW
ALL Ceneco consumers have suffered from the 18% increase in the price of electricity implemented last month. Many will have difficulty in meeting the additional cost and, for some, there will be hardship.
In its Sun.Star Bacolod advertisement published on Thursday 28 April, Ceneco reminded us that the price hike of P 1.27 per KWH was announced at a press conference on 8 December 2010. In fact, the press conference stated that the hike would be in two phases, P 0.36 per KWH on 26 December 2010 (which did not materialize) and P 0.91 per KWH in March 2011.
But is a press conference, held nearly five months previously, the best way to communicate bad news to Ceneco’s member consumers? We do not think so.
Ceneco has 143,000 account holders. The total readership of Sun Star Bacolod and the other local newspapers comprises approximately 10% of Ceneco’s accounts. 90% will not have been aware of the press conference. This is one of least efficient methods of communicating with Ceneco’s member consumers.
The way for Ceneco to tell us the bad news is surely to place a note with the previous month’s bill informing us of impending price hikes. We would also appreciate a cogent and quantified explanation as to how the hike is justified. The somewhat sententious ‘So the Public May Know’ missive which we received with our April bill was not particularly helpful in this regard.
Also at the 8 December 2010 press conference, Ceneco announced the arrival in Bacolod on 14 December of Energy Secretary Jose Rene D. Almendras who would be launching the Wholesale Electricity Spot Market (WESM) for the Visayas which started operations on 26 December 2010. WESM, as Ceneco President Gasambelo said at the 8 December 2010 press conference, would enable distribution utilities and cooperatives to purchase electricity from power-generation companies at competitive prices.
According to the WESM Website, ‘its role in the country’s overall energy reform is to create a fair, transparent and reliable trading environment that will attract investments and encourage healthy competition leading to the ultimate objective of cheaper electricity for all consumers’.
Ceneco’s support for WESM has been lukewarm. The co-operative has persisted in negotiating bilateral agreements which are not transparent and are not demonstrably more advantageous than WESM contracts where lower prices may be obtained due to the ability of the co-operative to negotiate on-line with many power generation companies simultaneously. In last Thursday’s advertisement, Ceneco confirmed its muted attitude towards WESM when it says ‘it will continue learning and exploring the lower cost opportunities that could be available from WESM’. Well WESM Visayas is now in its fifth month of operation and does many trades each day between buyers and sellers of electricity.
We also believe that Ceneco, as a public sector utility, should be able to re-negotiate or even rescind bilateral contracts if these contracts have become contrary to the public interest. We were concerned in 2007 when Ceneco signed a bilateral contract with KEPCO Salcon. The reason for our concern at that time was that the price Ceneco would pay for electricity produced from the coal-fired plant would be dependent on the price of coal. If coal prices increased, then Ceneco would pay more for the electricity under the terms of this contract. Therefore, it is the Ceneco consumers, not KEPCO, who shoulders the risks associated with the possibility of coal price hikes.
We are pleased that several local government units in the Ceneco area are seeking help from the Electricity Regulatory Commission (ERC) in judging the fairness of Ceneco’s contracts. This is a start. But since the ERC has already approved these contracts, it is difficult to expect it to change its mind. We would also look to the Congressmen of Ceneco’s area of responsibility to observe whether they consider that their constituents are being treated fairly.
PNoy’s government reiterated many times that it has a strategy of having a high growth rate for the Philippines. Under current circumstances, we can only obtain a reasonable growth rate if we are able to consume more energy, particularly more electricity. Empirical studies have shown that a 6% economic growth rate requires a 10% increase in electricity consumption. The P 1.27 per KWH price hike in the Ceneco region will have the effect of depressing the demand and truncating our much needed economic growth.
Energy Secretary Almendras needs to understand what is happening on his watch and to decide whether his energy policy is compatible with the government’s growth strategy.
Under PNoy’s governance, too many decisions are made without properly understanding their full ramifications.
And Ceneco should communicate more effectively with its member consumers.
* * *
Please tell me that the discomfiting brown-out last Friday evening was not due to the British royal wedding held at that time. The Philippines is supposed to be a Republic!
Published in the Sun.Star Bacolod newspaper on May 02, 2011.
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