Power rate hike seen in 2 years

Fare hike, fuel price hike, wage hike, and soon power rate hike.

Cebuanos this early have to brace for higher power bills as the Visayan Electric Company, Inc. is planning to file for an application for rate adjustment.

This is not however happening in the next few weeks and the company plans to do the filing on the later part of the year but implementation might be in two years yet.

Erramon Aboitiz, president and chief executive officer of Aboitiz Power Corporation, in a press conference yesterday, said that their current rates are based on assets and expenses of the year 2000.

“Since we have made a lot of investments and the costs have really gone up. I think after eight years, there will be a rate adjustment. Everything is going up,” Aboitiz said.

He however said that he has no idea yet as to how much increase they will be asking.

Juan Antonio Bernad, APC external vice president for strategy and regulatory affairs said that VECO’s current rate is an average of P6.03 per kilowatt hour for residential customers.

VECO is one of the companies owned by APC. It is the second largest private electric utility in the Philippines and Metro Cebu’s lone power utility serving more than 275,000 customers in the cities of Cebu, Mandaue, Talisay, Naga and Carcar and the towns of Consolacion, Compostela, Liloan, Minglanilla and San Fernando.

Bernad however said that most likely they will be filling a rate hike petition before the Energy Regulatory Board by the fourth quarter this year.

Bernad said that VECO’s petition will be included in the third batch of those seeking rate hikes.

The first batch is composed of Meralco and Cagayan power distributors while the second batch would be power distributors from Iligan, Cotabato, Davao and Mactan.

“If we will file the petition by the fourth quarter of this year, a series of public hearings will be made which will last from 18 months to 24 months. So whatever increase we will be asking this year, it will be implemented in 2010,” Aboitiz said.

Under the Electric Power Industry Reform Act it requires power distribution companies to hold public hearings and furnish the local government with its application for a rate increase.

Aboitiz also reported during their Annual Stockholders Meeting at the Cebu City Marriott Hotel yesterday, that APC’s consolidated revenues reached P11.3 billion and ended 2007 with a net income of P4.1 billion.

Aboitiz said that such growth spurred by the robust performance of both their generation and distribution businesses.

He said that favorable economic conditions led to strong electricity sales for APC’s distribution group, while the increase in generating capacity of the generation group led to a higher contribution from power revenues.

He added that for the first time, their power generation business accounted a larger share of the company’s earnings contributing 63 percent of their net income for 2007 versus the 45 percent in 2006, equivalent to P2.6 billion, up by 213 percent from the previous year.

Aboitiz added that APC posted an earnings growth of 144 percent to P1.01 billion for the first three months of this year from P415 million for the same period in 2007.

Consequently, he said, income from power distribution group grew by 52 percent hitting P1.5 billion or about 37 percent of APC’s net income.

APC owns interests in several distribution utilities in Luzon, Visayas and Mindanao, including VECO, Davao Light & Power Company, Inc., Cotabato Light & Power Company, Inc., Subic Enerzone Corporation and San Fernando Electric Light and Power Co., Inc., East Asia Utilities Corporation and Cebu Private Power Corporation.— Mitchelle L. Palaubsanon/NLQ