THE Philippine power sector is seeking a little breathing space in fulfilling certain obligations in supply contracts, as well as the removal of some charges that are passed on to consumers, as strict quarantine measures negatively impacted its finances.
Both ends of the energy supply chain have been hurting due to lower collections, while continuing to pay some fixed costs to maintain their operations during the enhanced community quarantine (ECQ).
Power producers are appealing to their suppliers to provide them with the same flexibility in payments that it gave distribution utilities (DU) that are purchasing power from their plants. They have also sought a reprieve in loan repayments.
“What we ask is simply any kind of flexibility in our own financial agreements and suppliers, and possible amendments in the market rules to address issues we experienced during this ECQ and issues that we foresee as we slowly transition to the new normal,” Philippine Independent Power Producers Association (PIPPA) Executive Director Anne E. Montelibano said in a presentation before the Joint Congressional Energy Committee hearing last Friday.
“As the effects of COVID-19 (coronavirus disease 2019) and the quarantine differ per area or location, contracts with the generators and the DUs may be adjusted taking into consideration their needs, depending on how the quarantine affected its supply and demand,” she added.
According to PIPPA, they continue to pay their fixed costs despite falling revenues due to the deferment of payments during the quarantine period, as ordered by the Energy Regulatory Commission (ERC).
Ms. Montelibano warned that a prolonged payment delay “will take a toll on their operations,” leading to possible closure or halt in investments for power plants.
“Despite this, our generators adapted and continue to make ends meet in compliance, support, and solidarity with the industry,” she said.
On the distribution side, power utilities in the countryside reported to lawmakers that they have reached out to various agencies, asking them to lift some generation charges, such as contract capacity charges, capital recovery fees (CRF), and minimum energy off-take (MEOT) fees.
The Philippine Rural Electric Cooperatives Association (Philreca) said these charges are still being passed on to consumers despite lower electricity consumption during the quarantine period, resulting in “higher” electricity rates.
“These [charges] will only translate to a higher electricity rate brought about by higher generation charge or component because — even if [there is] lower consumption in electricity — the fixed charges will have to be included and passed on to their [customers] electricity bills,” Philreca Executive Director Janeene D. Colingan said.
The group said only two electric cooperatives (EC) were able to “successfully” secure an adjusted agreement with generation companies regarding these costs.
When asked by Senator Sherwin T. Gatchalian, ERC Chairperson Agnes VST Devanadera explained that the generation costs are under power contracts which can be adjusted on a case-to-case basis and that the commission cannot just issue an advisory on removing these charges.
“Since they are covered by the PSA (power supply agreements), it has to be on a case-to-case basis… We cannot be too fast in issuing [an] automatic advisory on this,” she said.
In an advisory on April 15, ERC reminded distribution utilities “to procure their power requirements in the least cost manner.”
The average collection efficiency of rural utilities went down to 68% in April from 85% in March, based on Philreca’s report.
Marinduque Representative Lord Allan Jay Q. Velasco, chairperson of the House Energy Committee, is considering additional funding for electric cooperatives to aid them financially amid the decline in collections.
“I hope we can put in funding to ECs para matulungan sila (to help them),” the solon said.
The Department of Energy (DoE) reported in the same hearing that while there is a general drop in electricity demand during the quarantine period, there is a marked 40% increase in consumption in residential areas serviced by power utilities. Electricity demand from commercial and industrial sectors remains down.
UTILITIES FACE PENALTIES
In a statement over the weekend, the ERC warned distribution utilities that it will penalize those who will not comply with its advisories on payments of unpaid bills during the ECQ period.
“DUs that will be found and proven to have breached our directives during the national emergency and deviated from the intent of the President to alleviate the financial difficulties of the Filipino people during the crisis will be penalized through the imposition of appropriate fines pursuant to relevant rules and laws,” Ms. Devanadera said.
The agency is being “bombarded” with complaints from electricity consumers on alleged increases in their bills in May, especially from Manila Electric Co. (Meralco), the country’s biggest distribution utility.
On Friday, the agency ordered power utilities to allow customers with 200 kilowatt-hours of consumption and below to pay their unpaid bills during both ECQ and modified ECQ periods in six installments starting June 15.
It also tasked DUs to conduct actual meter readings and to issue new billings not later than June 8.
Only Cebu City and Mandaue City are still under ECQ, while Metro Manila, Bataan, Bulacan, Nueva Ecija, Pampanga, Zambales, Angeles City, and Laguna are under the modified ECQ up to the end of May. The rest of the country is under general community quarantine. — Adam J. Ang