THE NEW MANAGEMENT of Zamboanga City Electric Cooperative (Zamcelco) has questioned the validity of the power supply agreement (PSA) between Western Mindanao Power Corp. (WMPC) and the power distributor’s previous administration, as it insists the terms of the contract were not met to warrant the amount being claimed by the Alcantara-controlled energy company.
In a briefing on Tuesday, Zamcelco lawyer Joshua Gilbert F. Paraiso alleged that it was Zamcelco that was over-billed by P411 million by WMPC, a unit of listed holding firm Alsons Consolidated Resources, Inc., which is in turn claiming that it is owed P460 million for the energy sold to the electric cooperative.
“There was a condition that Zamcelco must attain the rating of ‘A’. Currently, the latest rating issued by the NEA (National Electrification Administration) is ‘C’. Zamcelco is still ‘C’ category,” he said.
The rating, which determines the performance assessment of an electric cooperative, is one of the conditions raised by the joint venture of Crown Investments Holdings, Inc. and Desco, Inc. The two won the right late last year to manage and operate Zamcelco in a P2.5-billion bid to take over Zamboanga City’s debt-ridden distribution utility.
Joseph Omar A. Castillo, the authorized official to speak on behalf of Crown Investments, said the investor-manager contractor had filed a motion on April 6, 2019 with the Energy Regulatory Commission (ERC) to claim a refund on the amount allegedly over-billed by WMPC.
The motion also sought the confirmation of the withdrawal of the application for the PSA between Zamcelco and WMPC.
The filing is the latest development in the two-month deadlock between the two parties since the new Zamcelco managers took over and discovered the alleged over-billing. WMPC suspended its supply of power to Zamboanga City after Zamcelco notified the power generation company of the supposed irregularity. The withdrawal caused two- to three-hour power interruptions in the city.
Mr. Castillo, who is also a lawyer for Zamcelco, earlier said that the new managers have so far paid up to P1.2 billion of the loans incurred by the electric cooperative. The amount is part of the group’s P2.5-billion investor-manager bid.
In the motion filed with the ERC, Zamcelco management said the PSA with WMPC was not yet in effect because not all prerequisites to its effectivity as provided in the supply contract have been met.
Aside from the NEA rating, it also noted that the PSA has yet to be approved by the ERC.
Zamcelco’s lawyers said Article 3.1(a) of the PSA stipulates that for it to be effective, it has to have been approved by the ERC, adding that to date, the regulator has not yet approved the application of the PSA filed on May 27, 2015.
In its motion, Zamcelco said the power supplier had charged the cooperative for a fixed capacity of 50 megawatts (MW) even when it did not use more than 25 MW every month.
The lawyers said with the PSA not yet in effect, the contracted capacity should not have been billed.
“WMPC had no basis to charge a capital recovery fee (CRF) and fixed operations and maintenance fee (O&M), based on a monthly ‘contracted capacity’ of 50 MW. WMPC should have computed the said fees based only on the actual nominated/utilized capacity,” the motion read.
The lawyers said 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.
They said the rotational brownouts in Zamboanga City had been reduced to one to two hours in March with the installation of diesel-fired generator sets to augment the supply with 24 MW. They added that Zamcelco is set to add 18 MW more by end-April. — Victor V. Saulon
