THE Energy Regulatory Commission (ERC) has directed the Central Negros Electric Cooperative, Inc. (Ceneco) to comply with rules on power generation costs from ineligible contracts after it found that the electricity provider imposed rates from two expired contracts.
In a news release on Thursday quoting a letter from ERC Chairperson Agnes VST Devanadera, she called on Ceneco and other distribution utilities to “strictly abide” by the commission’s rules to avoid unauthorized collection of electricity charges and, consequently, any sanction from the agency due to the expiration of relevant contracts.
After evaluating the submissions of Ceneco for the month of July this year, the ERC found that the power utility billed customers charges emanating from two expired power supply agreement contracts for the billing period of May 26 to June 2021 onwards.
Ms. Devanadera explained that the ERC’s policy is for generation costs from expired contracts to be pegged at whichever has a lower rate — the National Power Corp.’s time-of-use rates or the actual rate billed by the generation company.
Ceneco’s failure to follow the policy is a violation of ERC’s calculation of adjusted retail rates under ERC Resolution 16, Series of 2009 entitled, “A Resolution Adopting the Rules Governing the Automatic Cost Adjustment and True-Up Mechanisms and Corresponding Confirmation Process for Distribution Utilities.”
It also violates Article VI of the Guidelines for the Recovery of Cost for the Generation Component of the Distribution Utilities’ Rates which states that the ERC must first approve power supply contract costs before it is included in retail rates.
The ERC added that although generation companies intend to extend the term of their contracts with Ceneco, the request was still unapproved upon the date of billing as the companies need to comply with the competitive selection process required by the Department of Energy (DoE) once the contracts expire.
Under the DoE’s Circular 2018-02-0003, generation companies whose contracts have expired must apply for a new power supply agreement and comply with the department’s guidelines for competitive selection processes.
“The term or duration of power supply contracts may not be renewed or extended by mere agreement between the Seller and the Buyer,” the ERC said.
“The ERC will always adhere to its mandate of protecting and promoting consumers’ interests by continuously monitoring the propriety of charges billed by the Distribution Utilities,” Ms. Devanadera added in the letter to Ceneco.
Ceneco has not responded to a request for comment on the matter as of deadline time. — Bianca Angelica D. Añago
