Mindanao electricity contracts questioned

CAGAYAN DE ORO CITY – The energy advocacy and consumer rights groups Power for People Coalition (P4P) accused the Energy Regulatory Commission (ERC) and Department of Energy (DOE) for allowing non-competitive power contracts and high prices of electricity to plague consumers in Mindanao, and demanded immediate action to ensure thorough and equal protection of consumers from power sector abuse.

In a 360-page complaint filed before the DOE, the coalition group questioned over 70 power supply agreements entered into or applied for by electric cooperatives and distribution utilities that are in effect, despite not having gone through the Competitive Selection Process (CSP).

It said the CSP is important, saying it is intended to protect the public interest against high electricity prices.

“Electric cooperatives and distribution utilities in Mindanao have been violating their obligations of offering least-cost prices to consumers and employing acceptable procurement practices, and both DOE and ERC essentially allowed them to do so. By only selectively implementing CSP requirements, they doomed power consumers to at least two and a half decades of non-competitive pricing - the usual lifespan of power contracts,” said Engr. Dave Tauli, Vice President of the Lanao Power Consumers Group.

Citing the June 30, 2015 DOE circular mandating all distribution utilities to undergo CSP in securing power supply agreements, invokes a non-retroactivity clause entered into or applied for prior to the circular’s date of issuance.

“It took 15 long years from when the Electric Power Industry Reform Act (EPIRA) was passed for the ERC to mandate least-cost pricing. Our energy regulators chose to disappoint further by watering down the protection offered by CSP to consumers.”

“The June 30 cut-off for PSAs covered by the CSP is an unnecessary distinction that is telling of just how serious the ERC and DOE are in shielding the public from high prices of electricity, it seems,” said Atty. Luke Espiritu, President of the Bukluran ng Manggagawang Pilipino, who is also part of petitioners’ legal counsel. 

The coalition also said - according to the DOE’s latest EPIRA report - that power consumers in Mindanao pay the highest electricity rates on average among the three island regions.

It noted that non-competitive pricing played no small role in hiking power rates, citing as one example the FDC Misamis Oriental Power Plant which charges 1.40 P/kWh which is more than what other generation companies offer to electric cooperatives in the Mindanao Grid.

“Even with the CSP, many power companies, especially those relying on coal and other fuels, were allowed to price the electricity they produce and enter agreements with distributors as they pleased. Consumers in Mindanao reap the bitter fruit of this scheme, especially now as the price of coal and other fossil fuels in the global market continues to rise, and they are forced to shoulder higher generation costs. DOE and ERC must immediately amend the CSP rules and enforce them on all subsisting power contracts,” said Gerry Arances, convenor of P4P.

The groups also urge the DOE and ERC to take a step further in ensuring just and consumer-centered power procurement processes by leveling the playing field for indigenous and sustainable energy sources.

“You have a Mindanao grid teeming with excess and unused electricity supply from coal plants. But electric consumers are suffering from expensive electricity rates while other franchise areas in the region suffer brownouts. This is how mismanaged and convoluted electric power contracting is in Mindanao. It needs to be stopped,” said Ian Rivera, national coordinator of the Philippine Movement for Climate Justice.

“The cases of Mindanao electric consumers are filing today is to push power procurement rules and processes for renewable energy to be more accessible, stop unfair charges, and reduce the reliance on electricity sourced from coal,” he added, stressing this will make electricity rates affordable while reducing greenhouse gas emissions, making the Mindanao grid more reliant and green while contributing to much needed global climate action.

P4P further said that the matter of unfair rates should be treated by Energy authorities with urgency amid the on-going economic crisis, especially for an island region recording minimum wages that, at P275-352 per day, are on average the smallest in the country. (Mindanao Examiner)