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Consumers must not pay for Bantayan power cost: advocate

THE power cost in Bantayan Island, Cebu using a private plant to supply electricity to Bantayan Electric Cooperative (BANELCO) is a classic case of stranded cost from imprudent forecasting, over-contracting and multiple contracting parties, and the consumers must not pay for this.

Power Advocate Romeo “Butch” Junia has the Energy Regulatory Commission (ERC) about this, being one of the payors to Universal Charge for Missionary Electrification (UCME) that subsidized Bantayan Island power consumers.

In the Interim Power Supply Agreement (IPSA), the monthly cost of P27.00 pkWh for 255,000 kwh is about P6.8M. The Power Supply Agreement (PSA) cost, on the other hand, will depend on the approved capital recovery fee (CRF) applied to the 15MW GDC.

In an ERC hearing, BANELCO General Manager Lee Rivera admitted that Isla Norte Energy Corporation (INEC) plant for PSA could be operational in July 2021.

Rivera confirmed the take-or-pay provisos in IPSA and PSA but also attested that all supply from Bantayan Is land Power Corporation (BIPCOR) must first be taken before BANELCO taps into INEC’s supply. If BIPCOR delivers sufficient power until November, IPSA energy and PSA capacity from INEC will have nowhere to go, yet we will have to pay INEC for them if the contracts are approved by ERC, Junia warned.

BANELCO has painted itself into a corner and we have to make sure that rates to us for unused power do not become their wiggle out wedge, he added.

Junia cited the 2020 Distribution Development Plan submitted by BANELCO where a 15-MW peak demand is not reached until 2025-2026. For the years before 2026 BANELCO members and all other consumers who pay the UCME will subsidize the take-or-pay penalty. Junia noted that for 2022, the first full year of the PSA, the peak demand forecast is 12.05MW, 3MW short of the take-or-pay GDC indicating a significant amount of unused but paid capacity.

Worst case scenario, according to Junia, is Rivera’s declaration in his Judicial Affidavit “that by the fifteenth (15th) year of the PSA, BANELCO would need fifteen (15) megawatts of power.” That would mean that all consumers will be carrying the take-or-pay cost of unused capacity for 14 years of the PSA, but Rivera virtually retracted that statement by clarifying that his estimate was based on an earlier DDP.

Junia said the explanation, however, raises even more questions because a BANELCO DDP prior to Covid19 should have been more robust and optimistic given the growth trajectory of Bantayan’s tourism industry at that time. Tourism, unfortunately, took a big hit in the pandemic and Rivera, also noting that, changed tunes on BENALCO’s 2020 DDP projections claiming they were no longer valid.

He said the ERC will have to take a close and hard look at the numbers and figures submitted by BANELCO with their PSA application because their sole witness undercut them in his personal testimony. While regulation is not exact science it cannot just be haphazard and mere guesswork.

Junia noted that BANELCO members should be just as vigilant on UCME rates because they, too, pay it just like everybody else. When rates obtained or awarded under imprudent contracts are recovered from UCME, we all bear the unfair burden, Junia said.