Negros Power Meets the Press, Discusses CENECO Rate Increase

Negros Power CENECO Takeover - Bacolod City - Central Negros - power supply grid - electricity rate increase

Negros Electric and Power Corporation (NEPC) held a press conference on Tuesday night, May 21, 2024, at Park Inn by Radisson Bacolod. The event featured key speakers, including Mr. Roel Castro, President and CEO of NEPC, National Electrification Administration project supervisor Atty. Vic Alvaro, and Central Negros Electric Cooperative (CENECO) General Manager Atty. Arnel Lapore. While various topics were covered, the recent significant CENECO rate increase was a major point of discussion among attendees and panelists.

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CENECO Rate Increase + Key Updates and Announcements

NEPC’s Operational Timeline: Castro provided an update on NEPC’s progress and plans. He announced that the Senate had approved NEPC’s franchise, which enables the company to establish, operate, and maintain a distribution system for supplying electric power. The franchise, covered under House Bill (HB) 9805, includes the cities of Bacolod, Silay, Talisay, and Bago, as well as the towns of Murcia and Don Salvador Benedicto. The operational start is anticipated within one and a half to three months. This timeline is contingent on various factors. These include the President’s signing of the bill into law and obtaining a certificate of public convenience and necessity from the Energy Regulatory Commission (ERC).

Preparations and Investments: NEPC has already initiated several preparatory measures. They are setting up a temporary office at Robinsons East and deployed five response teams in Bacolod. Furthermore, around 230 out of CENECO’s 400-plus employees have expressed their intention to join NEPC. The employment process is expected to begin soon. NEPC has invested over PHP100 million in new meters, posts, and wires. This is in preparation for the joint venture agreement (JVA) with CENECO.

Addressing Power Rate Concerns

Although the press conference covered a range of topics, the surge in CENECO’s power rates was the hot topic for the afternoon. Both Castro and Lapore addressed this issue. They attributed the high rates mainly to increased demand for electricity due to extreme heat conditions across the country. They clarified that the rate hike was not linked to the JVA between NEPC and CENECO.

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Castro emphasized that there would be no “magic quick fix” to the high power rates. He also acknowledged that addressing the existing issues in CENECO’s power distribution system would not be easy. However, he reassured consumers that NEPC is committed to improving services. The company has allocated over PHP2 billion for the joint venture and capital expenditures aimed at modernizing and rehabilitating the distribution system.

CENECO’s Power Rate Hike Explained

The panelists also explained that the significant power hike was due to the increase in the cost of electricity generation and market price. Recently, CENECO announced that the residential rate for May 2024 is PHP 15.1632/kWh. This marks an upward adjustment of PHP 3.2066/kWh from the previous month’s rate of PHP 11.9566/kWh. The increase is primarily due to a 31.96% rise in the Generation Charge. This is largely driven by the Wholesale Electricity Spot Market (WESM) price hike from PHP 8.0879/kWh to PHP 12.6706/kWh. CENECO clarified that only 8% of the total rate goes to CENECO. The rest are pass-through charges. In short, only a small amount goes to the distribution utility as earnings.

CENECO did not earn more by increasing power rates. The bulk of the increase is attributed to pass-through charges, particularly the rise in generation charges. (Chart grabbed from CENECO Facebook page. Click photo to see post.

What Are Pass-through Charges?

Pass-through charges refer to the costs that CENECO collects on behalf of other entities involved in the electricity supply chain. These charges do not go to CENECO. These are passed through to cover various components of the overall electricity cost. Distribution charges are for administrative and operational services and the Reinvestment Fund for Sustainable CAPEX (RFSC). Since 2010, CENECO’s DSM and RFSC rates have remained unchanged. 92% of the rate consists of pass-through charges such as Generation and Transmission charges, ERC-approved adjustments, government subsidies, and taxes.

The bulk of the pass-through charges are the Generation Charges. These charges cover the costs associated with producing electricity. They are paid to power plants or generators from renewable sources like solar, wind, and hydro, as well as conventional sources. Generation Charges fluctuate based on market conditions and fuel prices. For May 2024, the increase in Generation Charges was a major factor in the overall rate hike.

It was mentioned that although all power distribution companies also raised their rates, only MORE Power Iloilo, the sister company of Negros Power under the leadership of Castro, raised the least amount of PHP 1, while others increased by PHP 3, and some even by PHP 5 or more. This indicates that MORE Power Iloilo must be doing something right to keep power increases at a minimum. It is also noteworthy that, compared to CENECO, MORE Power Iloilo has a higher distribution charge. So for them to still have a lower overall power rate is indeed impressive.

Look how cheap power rate in the City of Iloilo is. The above chart is screenshot from www.morepower.com.ph

Future Expectations

Enhanced Services: NEPC aims to provide better service to consumers by implementing advanced systems for power supply distribution. This includes significant investments in infrastructure and technology to ensure reliable and efficient electricity services.

Community Support: The joint venture with CENECO has received strong support from the community. Over 55% of CENECO consumer members ratified the JVA in a plebiscite held last year. This partnership is expected to bring about substantial improvements in the region’s power distribution system.

The press conference held by NEPC at Park Inn by Radisson Bacolod was a platform to discuss various important topics, including the recent power rate increase by CENECO. While acknowledging the current challenges, NEPC, led by Roel Castro, is dedicated to enhancing the power distribution system through significant investments and strategic initiatives. The Senate’s approval of NEPC’s franchise marks a critical milestone, promising a future of improved and reliable electricity services for the Central Negros region.

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