ERC validates VECO-CPPC accord

The Energy Regulatory Commission (ERC) sees no irregularity in the accord between the Visayan Electric Company (VECO) and the Cebu Private Power Corporation (CPPC). ERC is reacting to a news item entitled “Accord that could raise power rates ‘irregular’” published in one of the major dailies in Metro Cebu.

Lito Vasquez, Freedom from Debt Coalition (FDC) Cebu Secretary General was quoted as saying that “the agreement between distributor VECO and producer CPPC failed to follow proper guidelines.” He further said that “the parties should have published their agreement first before asking for approval, as stipulated in the implementing rules and regulations of the Electric Power Industry Reform Act.” If these provisions are not followed, according to Vasquez, “the ERC has no right to hear the matter on July 23.”

“The agreement between VECO and CPPC is bilateral and private between the two parties, hence no publication is required. What is required by law is the publication of an impending application with the ERC on matters, as in this case, rate adjustment petition, which the parties did comply. Therefore, the Commission sees no violation of the IRR as claimed by FDC,” ERC Chairman Rodolfo B. Albano, Jr. asserts.

“A joint petition has been filed by the two parties calling on ERC to approve its Interim Agreement. The ERC shall conduct a formal hearing on the petition, giving proper notices to all parties concerned, and thereafter, shall decide the case based on the evidence presented by all parties. The July 23, 2004 initial hearing is clearly an exercise of our regulatory function in compliance with the mandates of EPIRA,” Chairman Albano added.

VECO and CPPC filed the petition in compliance with the Commission’s Decision in ERC Case No. 2003-575 enjoining them to address the problem of CPPC’s non-recovery of the true cost of generating power by negotiating and agreeing to a reasonable solution to their dispute.

ERC found the need to immediately act on the petition of VECO and CPPC to address the power supply situation in Metro Cebu. The Cebu Chamber of Commerce and Industry (CCCI), which represents various electric power consumers in the industrial and commercial sector in Cebu City and its neighboring cities and municipalities has expressed alarm over the gloomy forecast of power industry experts. The CCCI agrees that CPPC must be allowed to operate in a financially viable manner in order to meet immediate generation requirements and encourage the continuing investments in the power industry in the long run.

“We have examined the Interim Agreement and found the provisions therein to be just and reasonable. We wish to remind you Mr. Chairman that we have expressed our concern on this same issue in two previous letters and again wish to reiterate our position for urgent resolution of the same. In consideration of a stable supply of electricity, we find that the reasonable increase in tariff requested by CPPC is acceptable,” Carlos G. Co, Chairperson of the Cebu Power Core Group of CCCI expressed his letter to Chairman Albano.

“ERC stands in the middle to protect the interests of both electricity consumers and investors. We assure Metro Cebu consumers that there will be no arbitrary or indiscriminate price increases,” the chief regulator clarified.

July 23, 2004