Akelco urged to invoke ‘force majeure’ to suspend PSAs during Boracay closure

By Lenie Lectura -  April 23, 2018

https://businessmirror.com.ph/akelco-urged-to-invoke-force-majeure-to-suspend-psas-during-boracay-closure/

THE Aklan Electric Cooperative Inc. (Akelco) was urged on Monday to invoke the “force majeure” provisions of its power-supply agreements (PSAs) with power-generation companies to temporarily suspend the procurement of unneeded electricity during the Boracay closure period.

This is necessary so Akelco will not pass on to consumers extra power charges during the impending six-month closure of Boracay Island.

Sen. Sherwin T. Gatchalian, chairman of the Senate Committee on Energy, said  that, from a high of 28 megawatts, Boracay’s energy demand will drop to a mere 4 MW during the closure period, leaving a huge surplus of unconsumed electricity contracted by Akelco through long-term PSAs with various generation companies.

If business goes on as usual, the rest of Akelco’s customers throughout Aklan, Antique and Capiz will have to pay an additional P1.58 per kilowatt hour in pass-on charges to compensate generation companies for the electricity that is not consumed on Boracay Island. This will result in a total of P178 million in additional charges to be shouldered by consumers over the next six months.

“That would be an unconscionable burden to put on Visayan power consumers, who already have to suffer through high power rates during the summer,” Gatchalian said.

Thus, to prevent the imposition of pass-on charges, the senator called on Akelco to invoke the force majeure provisions of its PSAs.

“The closure of restaurants, resorts and other commercial establishments on Boracay Island during the effectivity of the closure order will not only result in the loss of jobs; it will also drive down the demand for electricity in Akelco’s franchise area, as these commercial establishments account for 41 percent of the electric co-op’s power demand,” the senator said.

“Clearly, the complete closure of Boracay is an unforeseeable event completely beyond the control of Akelco. This is definitely an instance when force majeure will apply,” Gatchlian said, noting the forthcoming declaration of a state of calamity in Boracay would bolster Akelco’s case.

“The state of calamity declaration would also allow the local government units and Akelco access to calamity funds. These should be used to further mitigate the impact of the Boracay closure on electricity consumers in Aklan, Antique and Capiz,” he added.