Energy commission urged to junk firm's rates appeal

Sunstar Iloilo

THE Freedom from Debt Coalition (FDC)-Iloilo urged the Energy Regulatory Commission (ERC) to junk altogether Panay Electric Company's (Peco) proposed major capital expenditures for 2011 to 2015 in relation to its compliance to Performance-Based Regulation (PBR).

Members of FDC on Tuesday held a protest action to convey their demand outside West Visayas State University, where a public hearing was ongoing.

The public hearing was called by the ERC for the purpose of presenting and discussing its draft determination, or its preliminary evaluation on the Peco petition before consumers of Iloilo City.

The demand of FDC was made after Nel Consulting Limited (NCL) released a final report to ERC suggesting that Peco slash its proposed major capital expenditures by 63 percent or a P P205.58-million reduction from P326.60, the total amount in its application, which sought favorable approval from the ERC.

In October 2010, Peco submitted its application to ERC under the Rules on Setting Distribution Wheeling Rates (RDWR). The application, however, will entail a P0.33 centavos rate increase, which Peco intends to implement and collect from its more than 44,000 consumers in Iloilo City in the period of five years, or from 2011 to 2015, as a regulatory period set under the RDWR.

The FDC, however, vehemently opposes the rates increase petition, saying it is disadvantageous and will over-burden consumers of additional cost for electricity.

Ted Aldwin Ong, FDC-Iloilo chairperson, said consumers will again be made as milking cow by Peco owners because through this petition, Peco proposes to make improvements with money coming from the pockets of consumers and not from the millions of profits earned by Peco.

FDC said Peco proposes to implement major capital projects, which include the following:

1.) Construction of P110-million proposed new office building in its old plant along Gen. Luna Street;

2.) Construction of P170-million new power sub-station at its pole stockyard along Diversion Road in order to ensure stable power supply to big business that will come in at the Diversion Road area;

3.) Purchase of P5-million worth of new luxury vehicles for the use of its executives and officials; and,

4.) Procure new office facilities and equipment like computers; concrete poles and power transformers.

FDC also revealed that in its application for the construction of a new office building, Peco pegged its cost at P43,000 per square meter (sqm).

The NCL, however, contacted the Royal Asian Appraisal in order to validate the prevailing cost per square meter of a typical three- to six-storey office building in Panay region and found out that it only ranges from P18,000 to P20,000 per sqm.

"To employ all the trick in the book in order to get profits from every opportunity is a classic practice of Peco. Just multiply the P0.33 centavos increase to the number of consumers and in turn annually for the next five years and you will know that millions of pesos are up for grabs by Peco owners," said Ong.

Ong asked: "So do you think we are going to benefit from these projects or from the rate increase? Of course, not! How could these projects become an advantage to consumers when it is consumers' money that will be used to finance these projects through the Distribution Charge yet at the end it is Peco that will end up owning it?"

"To allow the ERC to issue a favorable decision is legitimizing Peco's robbery of consumers' hard-earned money. This application must be junked together with the rules and legislation like the Electric Power Industry Reform Act for it institutionalizes these kinds of injustices against consumers and people," he added. (PR)