ERC's order spares Iloilo from power interruption
Iloilo -- The provisional authority granted by the Energy Regulatory Commission (ERC) to Panay Electric Company (Peco) saved Iloilo City from a widespread power outage earlier warned by Panay Power Corporation.
However, electric consumers in the city should expect higher electric bills in the next billing.
ERC on December 14 issued Peco a provisional authority to charge consumers a higher rate of P6.5121 per kWh to address the financial difficulty it is suffering at present.
The provisional authority refers to Peco's petition for approval of its Amended Purchased Power Agreement (PPA) with Panay Power Corporation.
'The ERC is aware of the detrimental effects of a massive blackout in Iloilo City, thus it resolved to issue a PA allowing PPC to recover the cash necessary to generate power. This order provides a temporary relief to PPC while the ERC is still evaluating its Amended PPA with Peco,' said Rodolfo Albano Jr., chairman of ERC.
A press release from ERC said the PA granted will mean cash flow alleviation to Peco and PPC for it will address their fuel cost, cash component of operating and maintenance cost (O & M), and interest expense. The ERC approved an initial estimated amount of P1.2500 per kWh for O & M which is based on Peco's application, P0.3500 per kWh for interest expense on debt, and P4.9121 per kWh for fuel cost which is the actual as of October 2005. Altogether, the indicative amount is P6.5121 per kWh.
Peco is allowed however to make appropriate adjustments every month to its fuel cost and O & M based on actual expenses since they vary from month to month subject to confirmation by ERC and if necessary a true-up upon the issuance of the final authority.
The ERC also ordered Peco to re-enter into ancillary services agreement and to connect to the Cebu-Negros-Panay Grid as soon as possible in order to avoid any future recurrence of this crisis situation brought about by the isolation of Peco from the said grid.
The isolation of Peco from the grid means that it can only source its power from PPC which places the consumers within their franchise area at risk of blackouts every time PPC is faced with imminent closure. In line with this, the ERC ordered Peco to submit a monthly status report on its connection with the Cebu-Negros-Panay Grid.