13 M consumers face brownouts, rate hikes – ERC

By Myrna M. Velasco – August 11, 2019, 10:00 PM
from Manila Bulletin

As SC invalidates more than 100 PSAs

Rotational brownouts and higher electricity rates may await millions of Filipinos in the areas being served by more than hundred power supply agreements (PSAs) that were invalidated with finality by the Supreme Court (SC).

ERC logo(Photo courtesy of www.erc.gov.ph)

After the Energy Regulatory Commission (ERC) failed to convince the SC to reverse its ruling nullifying the PSAs, an estimated 13 million of electricity consumers in various parts of the country should brace themselves for higher power bills.

The power regulator, however, said they need to file a motion for clarification with the SC on how the decision shall be executed.
“The high court’s decision will result in possible immediate termination of 99 affected PSA contracts which will result in the cessation of power supply that are serving 13 million electricity consumers,” the ERC said.

With terminated PSAs, the affected DUs can no longer be served with electricity supply, hence, that will result in highly probable rotating brownouts for their customers.

Geographically, the power sector regulator indicated that with the junked PSAs, 9.371 million consumers in Luzon will suffer probable service interruptions or brownouts; 1.767 million in the Visayas; and 1.978 million end-users in Mindanao.

The option for the distribution utilities and electric cooperatives with nullified contracts will be to source from the Wholesale Electricity Spot Market (WESM), but the unintended consequence for their customers will be higher electric bills.

“In the advent of the said scenario, a total of 743 megawatts will have to be sourced from the electricity spot market,” the ERC said – and that will be at the scale of 370MW for Luzon; 86MW in the Visayas; and 287MW in Mindanao.

Nevertheless, the ERC emphasized that the rates in the spot market are manifestly higher in the range of P5.00 to P8.00 per kilowatt-hour; while the cost of the invalidated contracts had been priced lower at P3.00 to P6.00 per kWh, stressing then that “the increase in generation charge maybe inevitable.”

ERC Chairperson Agnes T. Devanadera qualified though that, “We will comply with the directive of the Supreme Court. We only need to seek guidance through a motion for clarification on how to implement their decision particularly on the rates and the continued supply of electricity to the affected public utilities.”

Overall, there are at least 106 contracts affected by the SC ruling; and the ultimate mandate of the final arbiter of the law is for these supply procurements to now go through competitive selection process (CSP) or bidding.