Cusi instructs power players to report details of ‘consumer cost pass-on’

By Myrna M. Velasco – February 6, 2018, 12:05 AM
from Manila Bulletin

Energy Secretary Alfonso G. Cusi said yesterday he would be issuing a directive to key industry players in the generation and distribution segments of the power industry so the government can flesh out which cost components are justifiable to be included in the electric bills and which ones can be categorized as “inefficiency costs.”

According to Energy Undersecretary Felix William Fuentebella, the department will be looking at possible caps that can be enforced relative to “pass-on cost to consumers.”

Initially, he disclosed that the instruction will be cast upon the distribution utilities – that way, the energy department could have a gauge which cost items are viable for pass-on, and which ones shall be discarded or adjusted.

Then the next ones will be the generation companies (GenCos), although he qualified that such mandate shall also be integrated in the modified competitive selection process (CSP) policy on power supply auctioning that the department will be issuing soon.

“If there are cost items that the GenCos have not listed when they joined the CSP tender, then they will not be allowed to pass on to consumers these corresponding costs,” Fuentebella explained.

He asserted that to fortify the country’s rates “pass on policy,” “there are international standards on inefficiencies that we’ve been looking at as reference.”

Cusi, for his part, noted that the system of existing regulation may have been allowing pass-on of various costs, “but we want to review that as their relevance may have already been eclipsed by the developments in the industry.”

The energy chief expounded “we just want to review it, we are not against anybody. But as the DOE, we have to carry out our jobs.”

Cusi pointed out that with the capping of pass-on costs, the goal of the government is for power utilities to also gain traction on improving their efficiencies as well as services to the consuming public.

“It cannot be a case anymore that they (GenCos and DUs) will just pass-on everything. We can’t also just let power utilities absorb everything if these are not warranted, so we want a policy that will be equitable and clear to all – we should level the playing field,” he emphasized.

All of these modifications on cost pass-on policies, Cusi added, will be integrated in forward policies that the DOE will be formulating in the coming months.