To recover costs VECO wants ERC nod to raise power prices

The Visayan Electric Company has asked the Energy Regulatory Commission to allow the recovery of a part of the P500 million it paid in advance to the Cebu Private Power Corporation to prevent the latter from shutting down.

If granted, this means that consumers of VECO would have to shoulder higher power rates ranging from P.70 per kilowatt hour to P1 per kilowatt hour, as the distribution utility would also be authorized to increase its rates.

VECO has filed a petition before the ERC to give it provisional authority to recover the P148 million, part of the P500 million advanced payment it paid to CPPC covering the period from November 2005 to April 2006.

It also filed for additional prayer to make the provisional authority permanent and allow it to recover the amount until September 2006.

Based on the contract it has with CPPC, VECO was supposed to pay P148 million less. This means that the distribution utility was only supposed to pay CPPC more than P300 million. The P148 million covers CPPC's increased rates, including operations costs.

However, at the height of the controversy on the power crisis last year, VECO was forced to pay the power producer P500 million after the latter threatened to shut down due to losses and high operations cost.

In November last year, CPPC announced it would cease to operate and stop supplying power to VECO following failure in negotiations on its Power Purchase Agreement with the distribution utility.

This prompted VECO to file a complaint of specific performance with prayer for the issuance of the writ of preliminary injunction and damages against CPPC at the Regional Trial Court.

Citing losses due to high taxes and implementation of the Electric Power Industry Reform Act, CPPC is seeking to increase its rates and amend the contract it has with VECO, which the latter opposed because it would mean higher electricity rates for its consumers. The shutdown of CPPC plant will also result to power crisis in the Cebu-Negros-Panay grid.

CPPC supplies 60 watts of the 231-watt load that VECO sells to the electricity consumers of Metro Cebu.

Freedom from Debt Coalition immediately expressed opposition to the petition of VECO as this would mean higher electricity rates in the future.

Michael Enriquez, FDC-Cebu president, said that VECO is not consistent with its stand because earlier, it refused to give in to the demand of CPPC, the reason why it filed a case before the Regional Trial Court.

"Cost recovery should not be passed on to the consumers. It is no longer the burden of the consumers but of CPPC because it covers its operations costs. CPPC will come out clean without paying the price," he stressed.

ERC gave VECO a week to present evidence to support its petition. Enriquez said they will also file their intervention before the commission after reading the evidence submitted by VECO. - Wenna A. Berondo