Republic of the Philippines


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Consumers not to be penalized for electric providers’ negligence - ERC

The Energy Regulatory Commission (ERC), in its letter to South Cotabato I Electric Cooperative, Inc. (SOCOTECO I) dated 26 March 2018, directed the latter to shoulder the differential billing between the Power Purchase Agreement (PPA) rate and the Time of Use (TOU) rate it applied to its member-consumers covering the period from 09 December 2015 until 24 October 2016.  The responsibility of covering the difference between the PPA rate and the TOU rate for the mentioned billing period will be shared equally with NV Vogt Philippines Solar Energy One (SE1), the generation company that SOCOTECO I entered into a power supply contract with.

“The consumers should not pay the price of the providers’ negligence.  In this case, SOCOTECO I and SE1 belatedly filed their Manifestation with Motion to Withdraw the ERC’s Decision a year after it issued the Board Resolution which converted the PPA to a Renewable Energy Supply Agreement (RESA).  Had the parties (SOCOTECO I and SE1) acted on the cancellation of their PPA and signing of RESA immediately, the consumers would have paid a lower rate.  The said act departs from the principle of providing consumers with just and reasonable electricity rates,” ERC Chairperson and CEO Agnes VST Devanadera explained.  

The ERC ordered SOCOTECO I and SE1 to apply the PPA rate of PhP 7.50/kWh for the billing period 09 December 2015 until 24 October 2016, consistent with its Decision dated 01 November 2014 on ERC Case No. 2014-048 RC (re:  In the Matter of the Application for Approval of Power Purchase Agreement for the Supply of Power to South Cotabato I Electric Cooperative, Inc. (SOCOTECO I), with Prayer for Provisional Authority).   However, considering the oversight committed by SOCOTECO I, its customers should be billed on the basis of the TOU rates for the subject billing period.  

SOCOTECO I converted its PPA with SE1 to RESA through the issuance of Board Resolution No. 42, Series of 2015 on 24 April 2015, considering the lesser rate impact of the latter to its member-consumers.  The RESA was subsequently signed on 25 July 2015.

The parties, SOCOTECO I and SE1 filed its Manifestation with Motion to Withdraw the ERC’s Decision on 05 May 2016 or almost a year after they signed the RESA.  Thereafter, the ERC approved the cancellation of SOCOTECO I’s PPA on 25 October 2016.

SOCOTECO I, in its letter to the ERC dated 04 September 2017, claimed that the PSALM average Time of Use (TOU) rates, averaging between PhP2.70/kWh to PhP2. 96/kWh should be implemented by SOCOTECO I, instead of the PPA rate of PhP 7.50/kWh,  to its member-consumers considering the conversion of its PPA to RESA.  

The ERC noted, however, that the PPA between SOCOTECO I and SE1 was valid from the time of its commercial operations date on 09 December 2015 until its termination on 25 October 2016 which affirms the validity of the PPA rate of PhP7.50/kWh within the said period.  Nonetheless, ERC maintains that the SOCOTECO I customers should be rightfully billed based on the TOU rates which they should have enjoyed had SOCOTECO I and SE1 acted on the conversion of the PPA to RESA in a timely manner.     
“The ERC believes that consumers should be not penalized for the negligence of electric service providers.  We will continuously adhere to our mandate under the EPIRA (Electric Power Industry Reform Act) to promote and protect consumer interests as they are affected by the rates and, thus, should not be unduly burdened further by events that are beyond their control,” Chair Devanadera emphasized.  


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