Veco sees lower systems loss by 2nd sem

CEBU, Philippines - With the new systems loss cap implemented by the Energy Regulatory Commission (ERC) from 9.5 percent to 8.5 percent, the Visayan Electric Company (VECO) expects systems loss to be below the new cap in the second half of 2010.

VECO executive vice president and chief operating officer (COO) Jaime Jose Y. Aboitiz reported that the power supply shortfalls in 2009 affected VECO.

These shortages would have resulted in 6.3 GWh of lost sales but the Interruptible Load Program (ILP), which VECO pioneered in 2009, managed to cover 3.3 GWh of the deficit.

In the same year, the ILP provided up to 30 MW of embedded generation capacity owned by participating VECO customers, who agreed to reduce their load on the VECO grid by using their own generator sets thereby sparing other customers from being hit by rotational power outages.

VECO recently switched on its substation located inside the CEMEX Apo Cement plant in City of Naga, Cebu.

According to Aboitiz, it is the first VECO-owned substation that directly synchronizes with a generating plant. The utility buys power from Cemex during peak hours and sells power to them during off-peak hours.

The substation supplies electricity for VECO’s residential, commercial and industrial clients, Aboitiz said.

This novel arrangement according to Aboitiz helps lessens both the power shortage in VECO’s franchise area and Cemex production costs.

“VECO should be able to provide Cemex’s full power requirements in the near future,” Aboitiz added.

Over-all, the AboitizPower distribution business which include VECO, Cotabato Lights Power Corporation, Davao Light and Subic Enerzone Corporation (SEZ) contributed to a total of P1.6 billion in income to AboititzPower’s 2009 bottomline, an increase of six percent compared to 2008. This business accounted for 25 percent of AP’s earnings last year.

Attributable electricity sales for 2009 reached 3,322 GWh, increasing by six percent year-on-year (YOY).

“We saw healthy growth from all sectors, with consumption of residential and non-residential customers up by seven percent and five percent, respectively,” said AP president and chief executive officer (CEO) Erramon I. Aboitiz.

“We remain optimistic that AP will realize substantial growth from its existing distribution utilities. We expect to achieve this through healthy organic growth and widening margins when we attain rate increases as we enter the new Performance Based Regulation [PBR] regime,” said Aboitiz.

Three of AP’s utilities have either started to or are about to be regulated under PBR. Cotabato Light began its regulatory period in April 2009, which Davao Light and VECO, its two larger utilities, will start in July 2010.

“One important step taken under PBR is the updating of the utilities’ regulated asset base from, in some cases, year-2000 figures, to current levels. For all three utilities, the Regulated Asset Base increased from P9 billion before PBR to P15 billion for the first regulatory year,” Aboitiz said.