CEBU, Philippines - The Visayan Electric Company (VECO) will be raising the cost of electricity effective August 1 to comply with the new standards set by the Energy Regulatory Commission (ERC).
VECO announced yesterday that the power rates will go up by a little over three percent.
This means that a household that consumes 200 kilowatt hours (kWh) every month will now be paying P1,692.85 from the previous power cost of P1,633.97 or an increase of about P58.
VECO will be shifting to the Performance Based Regulation (PBR) tariff setting mandated by the ERC, which is the new method that will be used to regulate the operation of power utilities.
While this new method will cause a slight increase in power cost, officials of VECO assured that this will also translate to more efficient service in return.
PBR is an internationally-accepted rate setting methodology that replaced the Return on Rate Base (RORB). ERC adopted the new method to ensure stability in the regulatory process and assure customers of reliable and sustainable service.
ERC explained earlier that PBR will compel power companies to file their annual application for the translation of rates to subject them to a regulatory audit.
Also, should distribution firms like VECO fail to meet the service level standards, it will be fined, but if it meets the requirements, it shall be rewarded through the performance incentive scheme.
Under the PBR, approved by ERC last April, the distribution charge of VECO will increase by P0.1194 per kWh while the supply charge and metering charge will increase by P0.0124 and P0.076 per kWh respectively applicable to residential houses only. VECO has another rate for big power consumers like business establishments.
The P0.1194 per kWh increase means that the P1.1165 per kWh distribution charge for residential customers will go up to P1.2360 per kWh by next month.
The supply charge, which used to be P0.2629 per kWh, will increase to P0.2753 per kWh while the metering system charge of P0.3953 per kWh will increase to P0.4713 per kWh.
The retail customer charge per month remains at P5.
Ricardo F. Lacson, Vice President for Administration and Customer Services Group of VECO said that the increase in the rate only applies to the distribution revenues part of the bill, but not its other components.
The increase applies to the portion that comprises only 22 percent of the total bill, he explained.
The Generation and Transmission portion that makes up 70 percent of the consumer’s bill will not increase and will remain at P4.4223 per kWh for the Generation Charge, P0.6431 per kWh for the Transmission Charge and P0.7617 per kWh for the Systems Loss Charge.
A slight increase in the distribution tax will add to the change though.
Lacson said that the rate adjustment is not a form of increase by VECO, but is in compliance with the requirements of the ERC set under the PBR.
ERC set and approved these rates based on VECO’s energy forecasts and allowed capital, operating and maintenance expenses, duties and other taxes, identification of the rolled-forward asset base and calculation of its annual revenue requirement (ARR).
Lacson said that this means that the rates of adjustments every year for the next four years up to June 30, 2014 have already been set.
But it shall vary depending on their performance.
If VECO also fails to deliver the pre-set benchmarks or the guaranteed services levels approved by the ERC, it has to compensate the customer for the broken promise.
Compensation goes directly to the bill but it will not be given until the end of the regulatory year.
VECO’s performance will be measured according to number of interruptions lasting at least five minutes experienced in a year where they are only allowed 24, average time to restore service per interruption where they are allowed not more that 126 minutes, systems loss of not more than 9.8 percent and time to process applications that should not go beyond eight days, among others.
Lacson said that implementing the PBR does not mean an increase for all consumers because it could mean a reduction in the monthly bill of some like to those who consume less than 100 kWh since VECO will also increase its Lifeline Subsidy or the discount to poor households.
Before, households consuming 21 to 25 kWh get a 50 percent discount, by next month, households consuming 21 to 30 kWh will have a 65 percent discount on their bill.
For five years since 2004, VECO did not impose increase to its rates until just last year when they had to adjust the rates to tune in to the present situation. — /NLQ (THE FREEMAN)