Refund P2.4B, ERC tells Pampanga power firm

LINE CHECK Field personnel from San Fernando Electric Light and Power Company Inc. repair power lines in Pampanga’s capital city of San Fernando in this undated photo. —PHOTO FROM SFELAPCO FACEBOOK PAGE

CITY OF SAN FERNANDO—The Energy Regulatory Commission (ERC) has ordered the San Fernando Electric Light and Power Company Inc. (Sfelapco) to refund more than P2.42 billion to its customers for allegedly violating the provisions of the Electric Power Industry Reform Act of 2001 (Epira).

The refund includes P654,397,381 in disallowed charges and P1,769,924,493 in excess of the allowed power generation rates from 2014 to 2022.

Aside from the refund, the ERC also ordered the power distribution company to immediately pay P21.6 million as a penalty for collecting generation charges from consumers during that period without the commission’s approval.

Sfelapco supplies electricity in this capital city of Pampanga and nearby town of Floridablanca and parts of Bacolor.

On Wednesday, the city government released a copy of the ERC order dated June 1 that denied Sfelapco’s motion for reconsideration for the ERC’s earlier decision on the case.

Mayor Vilma Caluag, who filed an opposition to Sfelapco’s motion, said she and other city officials learned about the latest ERC order and obtained a copy of it early this week.

The ERC issued the June 1 order in response to Sfelapco’s motion for reconsideration related to the commission’s March 3 decision ordering the power distribution company to return the more than P654 million it charged its customers and pay the penalty. In its latest order, the ERC ordered Sfelapco to refund an additional P1.76 billion to its consumers.

The Inquirer tried to reach Sfelapco officials for comment on Thursday, but Irwin Nucum, the company’s corporate communications officer, said in a text message that they had yet to issue a statement on the matter.

In its motion for reconsideration, Sfelapco said the collected generation charges between 2014 and 2022 were mere pass-through charges that it paid to Aboitiz Power Renewables Inc. (Apri) and were not appropriated for its own use.

‘Betrayals of duty’

But the ERC said Sfelapco’s implementation of an unapproved power supply agreement with Apri and its reliance on the latter’s billed charges without verification and consequent collection of such unapproved charges from consumers “are ultimately betrayals of its duty to ensure provision of its supply to its captive consumers in a least-cost manner.”

It cited the average power generation rate from the Wholesale Electricity Spot Market (WESM) that ranged only from P1.495 to P3.656 per kilowatt-hour (kWh) at the height of the COVID-19 pandemic in 2020.

According to the ERC, Sfelapco did not buy electricity from WESM when prices hit an all-time low in 2020 and continued to buy from Apri at rates between P3.953 and P5.459 per kWh.

Citing the Epira provisions involving the protection of consumers, the ERC said it had set a cap on the charges allowed for unapproved power service agreements at the level of the National Power Corp. Time-of-Use (NPC TOU) rates.

Sfelapco had maintained that the Apri generation charges it collected from consumers were based on ERC’s 2009 resolution on adopting the governing rules on automatic cost adjustment and true-up mechanisms and corresponding confirmation processes for distribution utilities, which is also known as the OU Rules.

Surplus

The power distributor said the generation rates were based on the NPC TOU rates and included the deferred accounting adjustment (DAA) and the financial benefits to host communities (FBHC).

But the ERC said the Apri rates were in excess of the NPC TOU rates and that it should not have collected the DAA, which is an adjustment mechanism only for the NPC and is not applicable to Apri’s generation charges.

It also explained that FBHC was intended for communities hosting power generation companies or energy resource developers, wherein they need to set aside P0.001 per kWh of the total electricity sales as financial benefits for host communities as required by Epira.

According to the ERC, the FBHC is the sole obligation of a generation company and should not be passed on to consumers.

It said WESM charges collected by Sfelapco from consumers, like line rental charges, site-specific loss adjustment, and net settlement surplus should have had prior approval from the commission.

The ERC said these “other charges” amounting to P654,397,381 must be returned immediately to its customers, while the P1,769,924,493 the distribution utility company had collected from 2014 to 2022 in excess of the NPC TOU rates should be refunded within 12 months after the receipt of the order.

Caluag said she would continue to lobby and file opposition to Sfelapco’s efforts to avoid refunding its consumers.

“We have been in talks with multisectoral leaders in San Fernando and, together, we will fight for a lower power rate that would benefit everyone in the city,” she said at a news conference on Wednesday.

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