Nobody in FICELCO paying for past mistakes
posted 7-Apr-2019  ·  
1,486 views  ·   0 comments  ·  

It will probably take months for the Energy Regulatory Commission (ERC) to render its decision on the petition filed by the Catanduanes Power Generation, Inc. seeking the recovery of P40 million in previously-approved costs and foregone energy from the island’s electric cooperative and the National Power Corporation (NPC).

The ERC order was posted in the regulatory agency’s website last Mar. 14, 2019, with the First Catanduanes Electric Cooperative, Inc. (FICELCO0 and NPC accorded two months to prepare their arguments before the May 23, 2019 hearing at the cooperative’s headquarters at Marinawa, Bato.

Briefly, the issue goes like this: in 2007, NPC leased the idle and defective Marinawa genset to FICELCO, which in turn subleased the unit to CPGI.

Spending P40 million of its own money, CPGI overhauled the genset at no cost to NPC and in 2012 the ERC approved its 10-year power supply deal with FICELCO.

For the entire 10-year period, CPGI was supposed to be paid P0.5471 per kilowatthour as Capacity Fee so it could recover its expense.

But the 10-year back-to-back lease agreement of the genset expired in 2017 and NPC, citing reliability issues in CPGI’s operation of the base load power plant, refused to renew the lease.

In doing so, NPC management ignored the advise of the Department of Energy that the lease and sublease agreements of its gensets in Mindoro, Palawan and Catanduanes must be amended to synchronize with its respective Electricity Supply Agreements.

The lease expired on October 2017, with the non-operation of the 3.6-megawatt genset expectedly causing power interruptions all over the island. It was only in May 2018, when CPGI vacated the plant, that NPC began undertaking the conversion of the former bunker-fuel fed plant into a diesel-fed genset and operated it by itself soon after.

Clearly, as the ERC found the petition reasonable enough, CPGI failed to recover its investment when the lease was not renewed and, much later, learned that NPC renewed the lease of its Mindoro power plant.

Thus it wants FICELCO and NPC to pay over P32 million representing the difference between the original Capacity Fee for the 10-year ESA and the recomputed fee for the ESA that was cut short to just six years. It also demands that NPC pay P8 million as legal interest charges for withholding standby capacity charges when the genset was not allowed to supply power to the grid in favor of the hydro power plants.

Assuming that the ERC rules in CPGI’s favor, the question that should concern the people of Catanduanes, particularly the 50,000 member-consumer-owners of FICELCO, is this: who will pay for the P16 million half of the payment?

Most likely, it will be added to the operational costs of the cooperative, to be recovered from the people through an increase in power rates.

Already, the effective power rate in the island is already one of the highest across the Philippine archipelago, thanks to the machinations of certain members of the FICELCO board in not fighting for the CPGI genset lease renewal and in signing power deals with questionable provisions.

Until now, no one from the FICELCO management or the present or past board of directors have been made to account for past irregularities, including the bungled CPGI lease.

Perhaps, when the time comes, the member-consumer-owners of the cooperative should demand that the concerned board of directors pay from their own pockets for whatever the ERC allows CPGI to recover from FICELCO and NPC.

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