Everytime there is a power outage, people are quick to blame the electric power distribution company. This is understandable. Customers get billed every month by the distribution utility which is tasked with bringing the power to the end-users.
But customers have to understand that power generation, transmission, and distribution are three different things. Sometimes it is the fault of the power plants. Sometimes, it is a problem involving the transmission service provider, or the one that brings the power from the generator to the distribution utility and electric cooperatives. Sometimes, it is the power distributor’s fault.
Recently, Zambaoanguenos suffered frequent power outages and many blamed their power distributor, the Zamboanga City Electric Cooperative (Zamcelco), demanding better administration of power resources. Unfortunately, their tirades may be misdirected.
Reports have shown that the apparent root of the power problems is the decision of West Mindanao Power Corp. (WMPC) of the Alcantara group to cut off Zamcelco’s power supply. Without receiving power supply from the power generator, Zamcelco had nothing to distribute to its customers.
But why did WMPC cut Zamcelco’s supply?
Zamcelco, saddled by insurmountable debt, recently awarded an investor-management contract (IMC) to Crown Investment Holdings Inc. and Desco Inc., a joint venture that won with a P2.5 billion bid meant to settle the cooperative’s obligations. They began managing the cooperative in January this year and had, in fact, already paid P1.2 billion of Zamcelco’s debts.
In the course of a financial audit, Zamcelco’s managers discovered that WMPC had been overbilling the electric cooperative for three years in the amount of P441 million. It was learned that WMPC was charging Zamcelco for a power supply agreement (PSA) that in fact, not taken effect yet.
As per agreement, the PSA becomes effective upon fulfillment of two conditions: First, that Zamcelco awards an IMC to a qualified private utility; second, that it attains a rating of “A” from the National Electrification Administration (NEA). The effectivity clause of the PSA also states that Zamcelco and WMPC shall jointly certify the effective date upon its occurrence.
So far, only the first condition has been met after Zamcelco awarded an IMC to a private utility. As far as the second condition is concerned, Zamcelco is still classified as a “C” cooperative by NEA, and has not yet attained the A rating agreed upon in the PSA.
And because the second condition has not yet been met, Zamcelco and WMPC have not yet certified jointly the effective date of the PSA.
Despite this, WMPC has already charged Zamcelco P441 million for capital recovery fee, and operation and management. This forms part of Zamcelco’s debt, which has long plagued the cooperative.
According to reports, Zamcelco received a letter from WMPC last January demanding payment. When Zamcelco replied that it was still reviewing the overbilled charges, WMPC cut off the supply days later, claiming depleted resources.
Zamboanga City Mayor Beng Climaco reportedly persuaded Zamcelco to offer WMPC a partial payment under protest of P150 million, while the two parties settle the issue. Zamcelco offered to pay P150 million, but WMPC refused.
It is understandable why Zamcelco refuses to pay the entire P441 million and why WMPC wants to collect the entire amount. Why many do not understand is why WMPC refuses to accept the P150 million while the matter of the alleged overbilling is being reviewed if accepting the amount and restoring WMPC’s power supply means Zamboanguenos will benefit from it.
While power generation in the country is not considered a public utility operation, it is still regulated and the Energy Regulatory Commission is empowered to determine whether a power generator is committing any abuse or anti-competitive behavior. The fact that WMPC is not a public utility does not mean that profit or self-interest should prevail over public interest.
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