DOE arm-twisting for ERC to fast-track power barge and electric coop rates – anti-consumer

TUCP condemns expensive power solutions in Mindanao: Poorest provinces to take hit, not Cagayan de Oro or Davao

Press Release
April 11, 2012

QUEZON CITY  –  The Trade Union Congress Party (TUCP) slammed the proposed Department of Energy (DOE) fast-tracking and expedited approval by the Energy Regulatory Commission (ERC) of the pending contracts and tariffs between the Aboitiz-Therma Marine power barges and the electric cooperatives as anti-consumer.

“The TUCP believes that the President is being badly advised by the DOE Secretary. The proposal which involves approval of the generation charge of Aboitiz of P14 per kilowatt hour (kWh) will now pave the way for an expensive tariff regime in Mindanao,” said TUCP Rep. Raymond Democrito C. Mendoza. He explained that this will impact only the smaller cities and rural areas serviced by electric cooperatives and not on the largest cities.

“We are shocked that this pro-power provider solution is being imposed on the developing provinces such as Cotabato and Bukidnon. Why is it the struggling rural areas striving to lift themselves from poverty and overcome underdevelopment and peace and order problems the ones who will be made to bite the bullet,” explained Rep. Mendoza.

TUCP pointed out that none of the expensive solutions are being directed at the two largest cities of Mindanao – Davao City and Cagayan de Oro. “It is the smaller cities – Kidapawan, Tagum, Dapitan, Marawi, Mati, Bislig, Dipolog, Isabela, Malay-balay, Koronadal and General Santos – that will be the sacrificial lambs and the rural areas around them,” explained Mendoza.

“Is it because provincial towns can be pushed around by the DOE and its attached agency, the National Electrification Administration (NEA)? Is it because they can bully the electric cooperatives using Presidential Decree 269 as amended by Presidential Decree 1645 where the General Managers of these electric cooperatives are appointed thru and by the NEA Administrator? Is it because the General Managers of these coops and their board of directors can no longer protect themselves and the poor consumers from the importunings of the DOE Secretary?” pointed out Mendoza. “Kayang-kayang takutin ng DOE at NEA ang mga managers ng electric coops pero hindi nila kayang kausapin ang mga malalaking pamilya tulad ng Aboitiz,” Mendoza added.

“Why couldn’t the DOE Secretary instead have convinced the Aboitiz-owned Therma Marine Inc. with its expensive power barges to moderate its financial acquisitiveness and lower its rates from P14/kWh to P8/kWh? In fact, why should the DOE resort to using outmoded, anti-democratic, Martial Law-era Presidential Decrees to pressure and frighten electric cooperative managers to buy expensive power from Aboitiz?” asked Mendoza.

TUCP pointed out that the power provider in Davao City is the Aboitiz group and that the distributor, Davao Light and Power is also Aboitiz. “The city power supply and distribution is owned by one family so they can already put the squeeze on consumers anytime. The same situation also applies to Cagayan de Oro with the Abaya-owned Cagayan Electric Power and Light Company (CEPALCO),” said Mendoza. “In these two cities, the DOE will just distance itself as the oligarchs who own the power system there can allow events to set the stage for them to eventually bring up rates also,” Mendoza added.

TUCP explained that even with the DOE providing a P9/kWh subsidy for power sourced from Aboitiz-Therma Marine Inc., this will already put in place a de facto high tariff regime which will tie up the electric cooperatives for a multi-year period. TUCP pointed out that even should abundant hydropower currently priced at P2.97/kWh currently become available after the Agus-Pulangui repairs, the electric cooperatives are already contracted to buy and distribute power from the more expensive Aboitiz-Therma Marine Inc. Eventually this emergency government subsidy of P9 will be phased out forcing the consumers to pay up the full cost of generated power at P14/kWh.

“The DOE has caricaturized the Mindanao power crisis as one whose answer lies in meeting supply needs. That way all the DOE needs to do is lead us down the path of least resistance: buy from the expensive Aboitiz-Therma Marine power barges. But the truth is that the answer lies in balancing the needs between supply and the cost of power. Mindanao’s development was always premised on the provision of cheap hydropower. This drives commerce and industry in Mindanao,” explained Mendoza.

TUCP advocates maintaining hydroplants as the main energy source with standby power in the form of government-owned power barges. We believe that allowing the National Power Corporation (NPC) more leeway in administering their gross receipts – instead of remitting the same to PSALM – will allow the full rehabilitation of the Agus-Pulangui Complex.

TUCP believes that lowering the reserve capacity of National Grid Corporation (NGCP) from 250 Megawatts (MW) to 150 MW would have readily released an additional 100 MW into the Mindanao Grid and that the fulfilment of rehabilitation of Agus 4 would have raised sufficient capacity. Instead DOE has pressured electric coops to buy expensive power from Aboitiz-owned power barges and called for further repairs of the Agus 6 to create an artificial shortage of hydropower when it is most needed. TUCP also remains opposed to the planned sale of 4 state-owned power barges which can best be used for a last resort measure for Mindanao or for when power shortages occur in Luzon or the Visayas. Once rehabilitated, they can also be used to address the current demand of Mindanao.