The CENECO BOD signed a 40-megawatt Power Supply Agreement (PSA) with KEPCO-SALCON (KSP) at the rate of P5.42 per kilowatt/hr. that expired last May 25, 2021 and illegally extended it and accepted by KSP, at a reduced 20 megawatt for one (1) year, in the same amount of P5.42/kilowatt/hr as against the winning Competitive Selection Process (CSP) price of P3.29/kilowatt/hr. The difference is P2.13 or an estimated P368 million for one year – on top of the 24-megawatt old PSA which was earlier and likewise illegally extended.
Because of the members-consumers-owners (MCO) vigilance, this was exposed and that the extended PSA was illegal because:
1. Supreme Court Ruling Alyansa ng Bagong Pilipinas, Inc. versus Energy Regulatory Commission (ERC) et. al G.R. No. 227670 May 03, 2019 that stated among others, that ERC guidelines of 2015 specifically the first paragraph of section 4 and ERC clarificatory resolution of 2016 are hereby declared VOID ab initio, therefore any extension are null and void. Consequently, all PSA applications submitted by distribution utilities (DU) to ERC on or after June 30, 2015 shall comply with the CSP.
2. “In the absence of an approved Power Supply Agreement (PSA), The Time of Use rate shall apply as prescribed by the Power Sector and Asset Management Corporation (PSALM). In reference to this, the Time of Use (TOU) rates are billed based on an Averaged Rate Schedule – which is P3.70/kilowatt/hr.
The above TOU is the amount that we are paying up to December 2021 prior to the issuance of default notice and cancellation of supply from KSP.
Meanwhile, KSP is demanding that CENECO pays the P5.42 per kilowatt/hr as contracted.
Since the members-consumers-owners are only paying the PSALM TOU amount of P3.70, the CENECO BOD is now in hot water because they have to pay the P1.72 difference (P5.42 less P3.70) or the amount of P280,298,294.20 as of December 2021.
Immediately thereafter December 2021, KSP declared and notify CENECO with a “NOTICE OF DEFAULT” of this P280,298,294.20 terminating thereby the 20-megawatt extension agreement as well as the other recently illegally extended 24 megawatts due to expire this 2022 or a total of 44 megawatts. In principle, there were TWO power supply agreements that were illegally extended.
Since this was terminated, CENECO now is purchasing power from the Whole Electricity Spot Market (WESM) in CASH AND PAYMENT DONE EVERY 22ND DAY OF THE MONTH, at the amount from P8 to P15 per kilowatt/hr. To pay in cash is a burden on CENECO’s cash flow standing thus the implementation of the “One Bill Policy”, or the “you don’t pay, we immediately disconnect policy”.
The WESM-related burden on their cashflow led CENECO to avail of a commercial loan of “P135 million and interest” as of to date with staggering effects on the members-consumers-owners.
The above actions of the CENECO BOD and Management resulted into:
- The unexplained rise of our monthly electricity rates.
- The unexplained brownouts and unannounced load shedding scheme due to demand and supply.
- Strict implementation of the One-Bill Policy
- Non-implementation of the Collective Bargaining Agreement (CBA) provisions with CENECO employees.
- Inability to refund P236 Million as ordered by the Energy Regulatory Commission (ERC)
- The availment of a P135 Million commercial loan to be shouldered again by the paying consumers.
Just last July 26, 2022, CENECO once again entered into an illegal contract through a negotiated contract they call “Emergency Power Purchase Agreement” with Palm Concepcion Power Corp. (PCPC), a coal-fired power plant, of 20-megawatts at P10.74 average generation cost, violating once again the Supreme Court ruling that all PSAs must undergo the Competitive Selection Process (CSP) or bidding and that certain processes should be followed according to the said Supreme Court ruling.
WE THE UNDERSIGNED, ALL MEMBERS-CONSUMERS-OWNERS OF CENECO, PRAYERFULLY PETITION THE PRESIDENT OF THE REPUBLIC, PRESIDENT FERDINAND R. MARCOS, JR., SENATOR RAFAEL T. TULFO, THE SENATE CHAIRMAN OF THE COMMITTEE ON ENERGY, AND BACOLOD MAYOR ALFREDO ABELARDO B. BENITEZ, TO LOOK INTO THE MATTER AND HELP US FILE FORMAL COMPLAINTS IN A PROPER COURT AND THE IMMEDIATE REGISTRATION OF CENECO TO THE COOPERATIVE DEVELOPMENT AUTHORITY (CDA).
NAME ADDRESS SIGNATURE