THE VOICE OF BUSINESS IN NORTHERN MINDANAO

Thursday, December 8, 2011

KKI cites “Critical Collaboration” with Cepalco in bringing down power rates

CAGAYAN DE ORO CITY – The consumer group which successfully intervened with the local power utility’s application for rate adjustment with the Energy Regulatory Commission has cited the unprecedented level of cooperation with the government agency and the utility which resulted in lower power rates for consumers in the franchise area for the next four years.

“Our group wishes to commend the Cagayan Electric Power and Light Company (CEPALCO) and the Energy Regulatory Commission (ERC) for being patient with us and walking us through the Performance Based Regulation process of rate setting which resulted in an outcome to the satisfaction of all parties,” said Rene Michael D. Baños, president of Konsumanteng Kagay-anon, Inc., a locally based consumer advocacy group which led the civil society intervention in the utility’s application with the ERC for a rate adjustment under the Third Regulatory Period.

Under the final rates translation filed by CEPALCO with the ERC, electricity rates for all types of customer categories were reduced starting July 2011 with residential customers getting the biggest reduction at 17 centavos per kilowatt hours, followed by commercial (.13), streetlight (.05), 138kV bulk power (.04), industrial (.03), and 69kV bulk power (.01).

“To put this reduction in its proper context, consider how power consumers in other franchise areas under private utilities all had rate increases for their next regulatory period under PBR such as Meralco (Metro Manila), Davao Light and Power Co. (Davao City) and Visayan Electric Power Co. (VECO) in Cebu,” Mr. Baños said.

KKI’s satisfaction with the ERC decision and the outcome of the year long process of evaluating CEPALCO’s application was shared by the local utility.

“We would like to emphasize that the resulting reduction in CEPALCO’s Maximum Average Price (MAP), and the consequent reduction in customers’ electric bills, were expected results based on the normal regulatory process as provided in the Rules in Setting Distribution Wheeling Rates (RDWR),” Mrs. Consuelo G. Tion, CEPALCO President and Chief Operating Officer said in a letter addressed to KKI. “In fact, you will recall that this expected rate reduction was announced by one of our witnesses during the evidentiary hearings of this case at SEARSOLIN.”  

Mrs. Tion also said that one the positive attributes of PBR is it drives Distribution Utilities like CEPALCO to perform better.

“As envisioned in the PBR, better performance translates to lower cost. This is what exactly happened to CEPALCO. The company’s actual performance for the past Regulatory Years showed a certain level of improvement that will now allow the company to provide better electricity distribution service to its customers at a lower cost,” she added. “In short, CEPALCO’s customers are now reaping the benefits of the PBR as envisioned by the ERC.”

Mrs. Tion also cited the importance of KKI’s participation in the PBR rate setting process which increased consumers’ knowledge about PBR and the rate setting process.

“We would like to commend the Konsumanteng Kagay-anon, Inc. for its active participation in the said regulatory process,” Mrs. Tion wrote in her letter to KKI.  “Such active participation resulted to better understanding and appreciation of the rate making process which is one of the most complex processes in an electric distribution utility business.”

For its part, KKI acknowledged CEPALCO’s openness and readiness to accommodate the consumer group’s request while it went into a “learning curve” to know more about PBR and make its intervention with ERC on the case more substantial and relevant.

“I am happy there wasn’t an adversarial mind set between KKI and CEPALCO during the PBR process which I attribute to the ‘critical collaboration’ between the two parties to arrive at the best rates and programs which could best serve electricity consumers in the franchise area,” Mr. Baños said. “I believe we have set a precedent in putting our heads together to arrive at this mutually acceptable and satisfactory outcome for the next regulatory period. Hopefully, other intervenors and DUs can similarly benefit from our experience.” 

KKI also cited the key role played by its legal counsel Atty. Edison John A. Arriola, A.D. of Cebu City who conducted several briefings for the Ad Hoc Committee organized by KKI in cooperation with the City Council Committee on Energy chaired by Kag. President Elipe. Atty. Arriola was referred by the National Association of  Electricity Consumers for Reform (NASECORE) through its president Mr. Pete L. Ilagan.

KKI also hailed its following supporters and cooperators for their support in making the services of Atty. Arriola possible: Misamis Oriental Filipino-Chinese Chamber of Commerce and Industry, Inc. (MOFCCCII) through its president Mr. Roberto Ching; Rep. Jose Benjamin Benaldo (1st District, CDO); Rep. Rufus B. Rodriguez (2nd District, CDO); Rep. Maximo B. Rodriguez, Jr. (ABAMIN Party List), Cagayan de Oro Filipino Chinese Chamber of Commerce and Industry Inc. (CDOFCCCII) though Pres. Quinciano Lui and VP Henry Dy; Philippine Chinese Chamber of Commerce and Industry (PCCCI) through Pres. Ricky Go; Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. (Oro Chamber) through Pres. Antonio Uy;  Cagayan de Oro Chamber of Industries (COCI) through Pres. Jerome R. Soldevilla; Phividec Industrial Estate-Misamis Oriental Industries Association through Pres./Engr. Augustus M. Adis, Rep. Yevgeny Vicente Emano (2nd District, Misamis Oriental); the Cagayan de Oro Hotel and Restaurant Association (COHARA) through Pres. Nelia B. Lee; and the  Cagayan de Oro Travel and Tours Association through Pres. Rex J. Tapungot.

The following institutions and persons were also instrumental in assisting the Ad-Hoc Committee render technical, legal and financial opinions on the documents submitted by CEPALCO: Institute of Integrated Electrical Engineers of the Phils, Inc. (IIEE) Cagayan de Oro City Chapter through Engr. Madeleine Waga; Cagayan de Oro ICT Council through Ms. Stephanie P. Caragos and Mr. Agustin Rodano; the City Accounting Office through City Accountant Theresa Wilma Rugay; City Administrator’s Office through City Administrator Griscelda Joson; City Legal Office through City Legal Officer Maya Enteria and Atty. Reymond Villablanca; and City Planning and Development Office through CPDO Estrella Sagaral and Isidro Borja. and NASECORE Cagayan de Oro through Mr. Ramid P. Gualberto. (KKI Press Release)
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