repost from Samira Gutoc; NO LIGHT, FRIGHT AND THE BILLION PESO PROBLEM In light of the Public Hearing to be conducted by the Congressional Committee on Energy (11-member) panel led by Rep Reynaldo Umali in Marawi today, I sought time with the various opposing parties on the myriad concerns confounding electricity (or the lack of it) in Lanao del Sur (and nearby). Lack of electricity (except for the supposed paying municipalities) has plagued the province, the second largest in the autonomous region, with several Mindanao power plants sourcing from the valuable Lake Lanao . An aggressive rehabilitation plan by the electric cooperative sought to depoliticize payments but traditions of depending on local executives for payments have red-marked Lanao with an accumulated debt (principal and interest over decades) to 7 plus billion debt. Rather than go to eachs defense and pointing fingers at one another (or drag the never ending cry pushing for a Lake Lanao to free us of our debts), I sought technical expertise from an Energy lawyer and here is what ATTY NESRIN BAZAR CALI (Energy Regulatory Commission) educated me about. My question, how are electric cooperatives paid by the member-consumers and why has electric bills/ costs gone up? Electricity is not free. Generation costs have gone up (across the country because of the shutdown of several plants). So since theres shortage in power supply and the demand for power remained high, power prices have gone up. To start with, just to give a basic picture of the energy industry, the electricity industry is made up of three major segments, namely, generation (power producers), transmission (the grid or “highway” through which electricity travels from the generation/power plants in high voltage; this is presently operated by the National Grid Corporation of the Philippines [NGCP]), and distribution (the utilities responsible for distributing or bringing electricity to the consumers; examples are MERALCO and electric cooperatives). It is significant to be aware of these three sectors because the costs of each are PASSED ON TO THE CONSUMERS, that is, the generation, transmission, and distribution costs are all paid for by the consumers. Because all electric cooperatives and distribution utilities in the country obtain their power supply from the same generation companies. There are very few players in the generation sector . So if you take a look at the bill of a consumer, his entire bill is broken down into 5 components: 1.) the generation cost; 2.) the transmission cost; 3.) the distribution cost; 4.) systems loss (this is the cost caused by losses in electricity suffered by the distribution utility when it passes through the grid, and losses caused by pilferage such as tampering of meters, consumers using jumpers etc.); 5.) the Universal Charge for the Missionary Electrification (this includes stranded cost, contract cost, lifeline subsidy [which is the subsidy given to poor consumers with monthly billings of 100 kilowatt hours or less], senior citizen subsidy, and subsidies given to off-grid islands [or those islands in the country that are very remote such that it is impossible for any investor to put up a distribution utility therein; the electrification of these islands is taken care of by the National Power Corporation or NPC]). All these costs are to be paid by the consumers. Once they pay all these costs (in lump sum), the electric cooperative is supposed to remit these payments to its power suppliers (generators), to the NGCP for transmission costs, and to NPC for the UCME. In short, distribution utilities and electric COOPERATIVES ACT AS COLLECTION AGENTS ” for these entities. We note the perennial problem of electric cooperatives in ARMM is the accumulated non-payments per household and inefficiency in remitting payments. This inefficiency is caused either by two reasons: First, the cooperative mixes up all their funds in one account. So it is inevitable that they, for instance, use the money meant to pay for generation costs to pay for transmission cost. The end result is they fall short on their funds for generation costs. Second, they fail to collect from their consumer-members or consumers fail to pay up. If an electric cooperative fails to collect payment from the consumers, where will it get the funds to pay the generation companies? Where will it get the money to pay for its transmission costs? Where will it get the funds for its operating costs? Where will it get the money to pay NPC for the UCME? Recommendations: Consumers take responsibility for their bills. Individual metering be pushed. Look into condonation and a SCHEME of payments to settle the almost 8 billion debt. CHARGING OF INTERESTS is hostaging the REHABILITATION of the electric cooperative. Rehabilitation and collection must be given time. Security sector has to be tapped to protect the power lines. Education Drive to prepare all consumers to PAY THEIR BILLS NOT DEPEND on their barangay captains or MAYORS to do so. A taskforce can be created composed of people from DOE , NEA and DBM, the latter to look into the financial condition of LASURECO. Look into how LASURECO can benefit from Republic Act 9520 or the Cooperative Code of the Philippines which holds cooperatives exempt from VAT and taxes. 1
Posted on: Fri, 07 Mar 2014 09:31:01 +0000
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