WESTERN Mindanao Power Corp. (WMPC) has set its conditions to resume the delivery of power to Zamboanga City’s electric cooperative, on top of which is the payment by the distribution utility of P467 million in outstanding debts.
“The resolution of this problem can only validly, legally take place within the bounds of a contract,” said Joseph C. Nocos, vice-president for business development of WMPC and the Alsons power group, the umbrella brand of the power business affiliates of the Alcantara family.
Mr. Nocos made the statement in a briefing on Wednesday, or a day before WMPC faces off with the new management of Zamboanga City Electric Cooperative (Zamcelco) in a hearing at the Energy Regulatory Office (ERC) head office in Pasig City.
“Zamboanga City is in crisis right now because it is experiencing brownouts, rotating power outages, of between one to six hours a day — six hours, whenever there are grid issues, one for hours because of problems that are specific to Zamboanga City,” he said.
The dispute between WMPC and Zamcelco’s investor-manager — the joint venture between Crowninvestments Holdings, Inc. and Desco, Inc. — started on Jan. 4, 2019, when the new management of the cooperative took over, Mr. Nocos said.
He said the new management refused to pay its obligations, which represent around four months of power delivered by WMPC from October 2018 to January 2019. He said WMPC sent letters to Zamcelco on Jan. 18 and 29, and Feb. 1 regarding the power distributor’s outstanding obligation since October.
“These letters were not answered,” he said.
As of noon of Feb. 4, 2019, Zamcelco stopped “nominating” or drawing power from WMPC. As a result, the generation company stopped operating, he said.
In 2015, WMPC and Zamcelco entered into a power supply agreement (PSA) for 50 megawatts (MW) of power. The electric cooperative had been drawing power from the generator company for more than three years beginning December 2015 after the grant of a provisional authority by the ERC.
Mr. Nocos said WMPC, through its 100-MW diesel-fired power plant in Sangali, Zamboanga City, had “faithfully complied” with its obligation under the PSA.
The other day, Joseph Omar A. Castillo, a lawyer for Zamcelco and its management’s authorized spokesperson, claimed that the PSA with WMPC was not yet in effect because not all prerequisites to its effectivity as provided in the supply contract had been met.
He cited these conditions as Zamcelco’s performance assessment rating of “C” as given by the National Electrification Administration, instead of category “A”. He also said the PSA has yet to secure final approval from the ERC.
Mr. Nocos said Zamcelco is estopped from invoking the PSA’s lack of validity because it had been drawing power from WMPC since 2015. It was only when the new management took over that issues between the two arose.
He said the PSA is effective because it was freely entered into and signed by both parties, and was duly approved by the ERC, although through a provisional authority. But he said other contracts within the Alsons power group have a similar provisional approval and the terms have remained binding.
Aside from the payment of the outstanding obligations, he said WMPC would resume the provision of stable and reliable power with the recognition by Zamcelco of the existing PSA between them.
He said the third condition is the nomination from Zamcelco, which is required for the WMPC plant to dispatch power to the electric cooperative.
Mr. Nocos also addressed Mr. Castillo’s claim that WMPC had “overbilled” Zamcelco by up to P411 million.
“WMPC never overbilled Zamcelco. The amounts billed and paid for were consistent with the payment formula provided in the PSA that was agreed upon between Zamcelco and WMPC,” Mr. Nocos said.
He said under the terms of the PSA, the capital recovery fee and the fixed operations and management fee charged to Zamcelco are based on the contracted capacity of 50 MW.
“This is what was charged to and paid for by Zamcelco nothing more,” he said.
On March 27, WMPC sought a dispute resolution before the ERC, which will hear both sides on Thursday.
In its motion on April 4, Zamcelco said the power supplier had charged the cooperative for a fixed capacity of 50 MW even when it would not use more than 25 MW every month. Its lawyer said that with the PSA not yet in effect, the contracted capacity should not have been billed.
The motion stated that for the past three years, Zamcelco’s monthly power nominations to WMPC had not exceeded a daily average of 25 MW, or only half of the contracted capacity that was used as basis for WMPC’s charges. — Victor V. Saulon
