Bohol power rates threaten resort owners

Some resort operators in Bohol province plan to cease operations because of increasing power rates, said Gov. Edgar Chatto.

Chatto said that Wholesale Electricity Spot Market (WESM) operations should be suspended to prevent further rise in their electricity rates.

He asked the Energy Regulatory Commission to intervene and “correct” power prices.

“Under WESM rules, intervention and market suspension can be imposed if there is an extreme  condition in the grid arising from an emergency, threat to system security, and an event of force majeure. The higher settlement prices are already billed to the traders and passed on to consumers, hence the urgency of ERC intervention,” said Chatto.

The Bohol governor made a presentation of the local power situation during the Regional Development Council (RDC) meeting held at the social hall of the Cebu City legislative building yesterday.

Cebu City Mayor Michael Rama,  RDC Region 7 chairman,  said he  would bring  power concerns in Bohol and the rest of the Visayas to the National Economic and Development Authority and the Department of Energy.

Bohol’s  three power distributors – Bohol Light Company Inc., Bohol Electric Cooperative (Boheco) I and Bohol Electric Cooperative II – already increased power rates by as much as P3 per kilowatt hour since January.

Boheco II, for example, sold  power at P7.35 per kilowatt hour in January and P9.8 in June, an increase of almost P2 per kilowatt hour.

“Upon proper study and review of the rate structure of the electric distribution utilities, it was found that the increasing rates are directly attributed to the increasing generation and transmission rates charged by power suppliers, in particular through the WESM and other independent power suppliers in Bohol, especially during peak hours,” said Chatto.

He said that power charges are further increased by other factors which include site specific loss adjustments and line rentals.

“Contrary to perception, electric distribution utilities in Bohol do not gain anything from the increase in prices of electricity as they only pass these charges directly to the consumers. In fact, electric utilities are put at risk as they have to pay in advance power producers and the transmission system,” said Chatto.

Chatto presented to the RDC a table showing the computation of the generation charges ranging from P3 to P6.3, which are   passed on to consumers from January to June 2012.

The WESM mechanism  which lets market forces  affect the price of electric power bought by some stakeholders is mandated in the Electric Power Industry Reform Act.

Chatto said that WESM was supposed to “end the inherently inefficient monopoly system for generating and selling electricity by providing consumers with the choice of power and the power of choice.”

“However, the abovementioned benefits have not been felt by the public. Instead, prices of electricity continue to rise. As observed by some, the power industry during the WESM implementation is not driven by the principle of economic and social justice but has been dictated by market rules which, to a great extent, favor some stakeholders,” Chatto said.

WESM is the biggest power supplier for Bohol.

“We strongly urge local power distribution utilities to map out plans for long term-power supply contracts with independent power producers offering lowest power rates as the best alternative to WESM,” he said. /CHIEF of reporters Doris Bongcac