• By The Financial District


Electricity consumers in the Visayas and the rest of the country were urged to participate in the Energy Regulatory Commission’s (ERC) virtual hearings on two (2) rate petitions of the National Power Corporation (NPC) on October 8, 2020 at 9:00AM and 2:00PM.

The first case seeks approval of a P20.7B Universal Charge for Missionary Electrification (UC-ME) for 2021 (ERC Case No. 2020-011RC) while the afternoon hearing is for the recovery of an alleged P5.9B 2018 UCME “revenue shortfall”, Case No. 2020-004.  

Anyone may be allowed to join by simply sending his email address to legal.virtualhearings.erc.gov.ph@gmail.com, according to   Romeo L. Junia of the United Filipino Consumers and Commuters (UFCC).

Junia said the extra charge could raise the monthly bill of a 200kwh-household by as much as P52.92, even higher when the on-going Automatic Cost Recover Mechanism (ACRM) charge of P0.0219 pkwh is added. The UCME is collected from “all electricity end-users” under Sec. 70 of the Electric Power Industry Reform Act (EPIRA) to pay for the high cost of diesel and bunker fuel plants that supply power to Small Islands and Isolated Grids (SIIG).

Junia is an intervenor in the NPC applications. And so is Visayan Electric Co. (VECO).

UCME was supposed to “be phased out in a period not exceeding three (3) years” under Sec. 74 of EPIRA, with a one-year grace period added, but 19 years into the power reform law the subsidy not only persists, it thrives. For the current year UCME is P0.1561 pkwh or about P15.6B on annual energy sales of 100B kwh but that is set to increase by 33% next year, to a staggering P20.7B. 

“We have to see where that increase will go, let alone ask why that subsidy persists up to the present, in spite of the mandatory phase out under EPIRA,” Junia said.

In Cebu, Junia pointed out, there are two (2) UCME coops with pending rate applications at ERC – Camotes Island Electric Cooperative (CELCO) and Bantayan Island Electric Cooperative (BANELCO). In the case of CELCO, it is a 15-year Power Supply Agreement (PSA) which Primewater Infrastructure Corp. obtained thru an Unsolicited Proposal while for BANELCO, it is a negotiated 12-month Interim Power Supply Agreement (IPSA) with Isla Norte Energy Corp. (INEC), a subsidiary of the Vivant Consortium that was awarded, separately, a 15-year PSA a year ago, also by BANELCO. 

While they may not be emblematic of UCME, they are nonetheless instructive and illustrative of how the subsidy scheme works, Junia explained. Under UCME, a subsidized coop procures its power supply from NPC-SPUG or a New Power Provider (NPP) with whom the True Cost Generation Rate (TCGR) is set. In the case of CELCO, the Primewater proposed rate is P14.01 pkwh, an improvement on the present NPC rate of P17.52 pkwh for Poro and P21.20 for Pilar.

For BANELCO, the awarded rate for the INEC IPSA is P27.12 pkwh while the Vivant PSA which will be implemented next year is awarded at P13.03 pkwh. The present supply at Bantayan under BIPCOR is P9.51 pkwh, resulting in an UCME subsidy of P20.86 pkwh for INEC, P7.05 pkwh under Vivant and P3.26 pkwh for BIPCOR. 

While the subsidized coop negotiates the TCGR, it is NPC-SPUG that applies and sets the Subsidized Approved Generation Rate (SAGR) for the various SIIG areas and the last setting of the SAGR was in 2011-2012 where Cebu area fell under the highest rate at P6.2546 pkwh.

At least Cebuano electricity end-users can take comfort in the thought that their burden is mitigated by a relatively high SAGR, Junia noted, but still, the subsidy ranges from a low of P3.26 pkwh to a very high of P20.86 pkwh, he added.

In 2016, the Department of Energy (DOE) adopted a Missionary Electrification Development Plan (MEDP) to “graduate” SIIG coops from the subsidy regime to commercial viability, where TCGR will match or equal the SAGR. Another path is inter-connection so that the coop becomes on-grid, from off-grid.  The policy of ‘tariff differentiation’ where UCME subsidy will be targeted to residential and marginal coop members so that commercial and industrial customers will not be unduly advantaged made so much sense, Junia said, but it has not been implemented.