Energy Regulatory Commission (ERC) with Department of Energy (DOE) and
Distribution Utilities from Region I and CAR.
LAOAG CITY – On 10 November 2022, Energy Regulatory Commission (ERC) kicked off the PSA Caravan in Laoag, Ilocos Norte. The nationwide roll-out of review of power supply agreements or PSAs is an initiative led by the ERC, together with the Department of Energy (DOE), to assist electric cooperatives (ECs) to explore and formulate immediate and mid-term measures to address the high cost of electricity in the country.
The PSA Caravan is the ERC’s grassroots-based efforts to evaluate primarily the generation component of consumers’ electricity bills. Generation charge constitutes almost sixty percent (60%) of the power bill and accounts for the cost of power generated and sold to distribution utilities (DUs) by generation companies under PSAs or through the Wholesale Electricity Spot Market (WESM) which the utilities then supply to their captive customers. Based on ERC records, as of August 2022, generation charges have increased by more than 20% compared to 2021 generation charges across Luzon, Visayas and Mindanao. The generation rate increase is driven mainly by the pass-through (non-fixed) component of the rates for the cost of fuel, specifically coal, and the upward adjustment in foreign exchange rate.
According to Commissioner Alexis Lumbatan, leading the ERC delegation in Laoag, “[t]he PSA caravan is here so we can look at your PSAs and find immediate and long term solutions for the DUs to be able to sustain themselves and for the consumers also to enjoy lower electricity rates. This is an industry wide concern. That's why we as regulators are now taking a proactive stance, and we are so happy that our new Chairperson Mona Dimalanta came up with this caravan. This is the first of its kind and we are happy to meet you all personally and for us to discuss on the table, the possible remedies that we would undertake. This is just the start of a collaboration by the regulator and all stakeholders, moving forward, meeting and facing head on, the challenges of high power rates. We are here to empower you! Your presence here is by itself a commitment to work with us and for the consumers.”
The ERC delegation, composed of representatives from the offices of the Commissioners and from different units involved in the evaluation of the PSA, was joined by the DOE representatives. Together, DOE and ERC collaborated in addressing the concerns of the various ECs.
The open forum brought out a significant number of insights and best practices that garnered productive exchange of possible solutions from the participant ECs. The ECs that participated in the Caravan include Central Pangasinan Electric Cooperative Inc. (CENPELCO), Ilocos Norte Electric Cooperative Inc. (INEC), Ilocos Sur Electric Cooperative (ISECO), Pangasinan III Electric Cooperative Inc. (PANELCO III), Abra Electric Cooperative Inc. (ABRECO) and Mountain Province Electric Cooperative Inc. (MOPRECO).
“Ito pong PSA Caravan seeks to enable the cooperative to go to the next level in terms of commitment to our people, the consuming public. If our efforts will lead to lowering power rates, at this point in time, considering the circumstances, I think that aside from our mandate, it is more of a personal fulfillment for us because at the end of the day, we are all power consumers.” said Commissioner Lumbatan at the conclusion of the day’s activities.
The PSA Caravan will be held in strategic locations to cover all the regions of the country. This week of 15th November, the Caravan is rolling in Cagayan de Oro for the discussions with ECs from Region X.