Ano ba talaga, Kuya?
What really is NPC's RORB?
 

• 14.28% - NATIONAL POWER CORPORATION - 2007 - Annual Report, up from 12.22% of the previous year.  Under "Measures of profitability (%)" 14.28% is based on the World Bank's formula.

• 30.54% - NAPOCOR Results of Operation By Plant Operator, January to December 2007 (In Million Pesos)

Note: The ratio of Net Income to the Rate Base comes out to be 38.6%, not 30.54%

•  12% - RORB was used by NPC is their petition for a rate adjustment using their audited financial statements for 2007.  Using the same statements, ERC, as basis for a provisional rate for NPC also used 12% as the allowed RORB.  Observing that some NPC assets had been sold out, ERC reduced the Rate Base accordingly but still allowed the !2% RORB to charge the following rates:

Shell Game

"Lipat" means "to transfer" in Tagalog.  In Cebuano, pronounced differently, has an entirely different meaning.  It is a verb which means "make an error through in-attention; lose track of; forget what one was talking about." But when the word, like so many other Cebuano words is repeated, it acquires another dimension of an error.  Thus, "lipat-lipat" means sleight of hand, esp. a thimble rig game where a seed is hidden under one of the three thimble-shaped cups and is quickly shifted from one cup to another.  This definition is taken from the Cebuano-English dictionary compiled by John U. Wolff when he was in Cebu in the early 1950's.

It appears that this is how the present bid of NPC to increase its rates is being played out with the ERC.

In August of 2009, VECO announced a petition to increase rates by P0.0218/kWh, which translates to 2.16% increase of its basic distribution charge of P1.00814/kWh.  Cebuanos and the City Council were poised to oppose this petition, but after five months of waiting, a notice of hearing was never made by the ERC and certain quarters started to inquire whatever happened to the petition.

A check with ERC in Manila revealed that the ERC dismissed the VECO petition in September 11, 2008 for the main reason that "VECO is scheduled to file its rate adjustment based on Return on Rate Base (RORB) and Annual Revenue (ARR) applications in 2009." If indeed that was an official schedule referred to in the ERC Order, it boggles the mind why, VECO submitted its petition seemingly clueless of the schedule for when they could file their petitions for rate increases.

Nevertheless, Cebuanos were able to breath a sigh of relief upon learning of the development, never mind that it came some 5 months later.

Most Cebuano's were shocked one day when they were greeted with an announcement that power rates would go up by April 1, the day of Fools.  VECO was the messenger of the bad news and quickly pointed out that "it was not by me."  They stressed that the increase in their unbundled rates in April would carry a rate increase awarded to NPC by the ERC in an order which they must have kept from the public since it was issued in September 11, 2008. No one noticed that while the VECO petitioned for a rate increase equivalent to only about 2% of their distribution charge, the NPC provisional adjustment granted by the ERC was a whopping 40% reckoned from the existing NPC base rate for the Visayas.

The timing of the presscon was made suspect when people came to realize that an ERC rate hearing was to be conducted on the following day or two.  "Unsa pa ma'y heringun kung duna man diay giaprobahan nga rate increase?"  This is the expected natural reaction for those that have been reading an ERC item about rate setting matters:

" Q. Are the consumers given the opportunity to be heard first before a petition is finally approved?

A. Yes. Public hearings are held to allow all parties concerned to air their views and clarify issues with the petitioner. These public hearings are conducted with the petitioner and designated representatives of all parties concerned in attendance. The schedule of hearings of unbundled rates applications is published in newspapers and/or announced through radio and television".( Scource, click here...)

The question is very cleverly placed because it includes the all innocent word "finally" without mentioning in the reply that the ERC, on its own and without need for a public hearing, may approve a Provisional Rate increase.  This is what happened to the latest NPC/PSALM petition for rate increase.  The petition was filed on January 16, 2009 and a Provisional Adjustment of rates was ordered and released on February 16, 2009 which specified the following rates:

Within one month after the NPC/PSALM petition was filed, the ERC confidently issued the provisional increase in rates effective on the following month and to be effected in the consumer billings by April 2009 using its powers to do so in the balanced interest of the utilities and the public.  In slightly over a month and after a partial hearing of the petition, the ERC Board may have worked over the weekened in order to apply some corrections to the provisional authority ordered only a month ago.

As the result of the first ERC hearing on the NPC/PSALM application held on March 20, the ERC made an order revising the provisional authority it had granted in February  reducing the provisional rate for the Visayas

Consider that the hearings were conducted on March 19 and 20; Thursday and Friday.  Unless the ERC worked over the weekend, the Order dated March 23 must have been done with lightning speed, unless of course the whole scenario was simply allowed to roll and play out.  

(We got a copy of the Order by email with this time stamp: Thu 3/26/2009 10:20 AM from info [info@erc.gov.ph].  I had to cut short completion of this article because Jun Perez of Radio Station DYAB called me up for an interview at noon.  He claims that their station in Manila got a press release from the ERC today regarding the "approval of a reduced rate" for the Visayas.  The figures and events are too convoluted that I am afraid I may not have enough time to explain it to everyone's satisfaction over the radio.  However, I promise that after the interview, I will try to elaborate on any of the issues that may not be properly clarified during the interview.)

This article is still being finalized......)(

 

03/25/08 - Whom the gods wish to destroy…
Read the rest of the Editorial from the Malaya here..... then, consider the following:
• President Arroyo has on numerous occasions criticized Meralco for having the highest rates in the country. Read the rest from the Philstar article.... Take note of the points touched by this article, specially on the amounts of the increases and/or refunds.
• "Meralco charges P2.44 per kilowatt hour for distribution as against the P1.48 in Cebu and P1.64 in Davao, and 91 centavos in Bataan." - from Malaya....
• "Garcia had also questioned why Meralco was charging its customers higher generation costs than power distributors in Cebu, Davao, Bataan, when Meralco had more than 20 times their customers and generation costs are equal in the Visayas and Mindanao." - from The Manila Times
•  "Arlo Garcia Sarmiento, assistant vice president for utility economics, said they have no choice but to pass on to consumers the Napocor rate increase. 'This is a purely generation- rate increase.' "
• "Considering that VECO is scheduled to file its rate adjustment based on Return on Rate Base (RORB) and Annual Revenue Requirement (ARR) applications in 2009, the Commission deems it more prudent that the instant application be incorporated therein." - ERC decision.
• "The EPIRA provided that upon the effectivity of the Act, residential end-users will be granted a rate reduction from NPC rates of thirty centavos per kilowatt-hour (P0.30/kWh). This is an executive order from Pres. G. M. Arroyo to extend relief on the high power rates to residential end-users. " - DOE website
• "The 12% RORB would alleviate the financial burden of NPC in providing the customers incentive schemes such as the thirty centavos (P0.30) mandated rate reduction (MRR) from NPC rates pursuant to Section 72 of the EPIRA and the prompt payment discount (PPD) granter to NPC's customers." - another ERC decision.
• "The Return on Rate Base (RORB) is 14.28%; Cost per kilowatt hour is P4.9870" - NAPOCOR financial statements.  If you cannot find it here, then see our archives.
• "The foregoing consideranda should not, however, be understood as an approval of the practice of unnecessarily curtailing the opportunities of parties litigant, barring exceptional circumstances. Otherwise, suspicion is aroused, and the public confidence eroded, to the detriment of the administration of justice. It is the duty of tribunals, judicial or quasi-judicial, not only to be just but to appear to be actually so.
  
  It is equally their task to sedulously avoid giving rise to speculation, rumours and gossip by hasty or ill-considered action." - Decision, Republic vs Medina
• "There's nothing wrong in the choice of venue (for the hearing of ERC Case 2009-003RC)" - ERC Legal Service and NAPOCOR lawyers. See notice of hearing scheduled for March 24, 2009  here or if missing, refer to our archives.
• The indecent invitation - ManilaMail.com

---

Divine Madness - “Those whom the gods wish to destroy they first make mad.”

 

• 03/23/08 - This is the magnitude of the requested rate increases in ERC Case 2009-004RC:
  

• 
  What reasons are presented by applicants to explain the large variance in the increase in rates being requested?  The rate for Luzon is only one-half of the rate increase for the two other regions.
• What has justified the ERC's immediate but partial relief to petitioners as to its magnitude and again distribution?  Why do the people of the Visayas deserve to carry the heavier burden of the requested increases?  Does it have anything to do with the certainty that the increase asked for the Visayas is more justifiable and equitable?  Or is the ERC simply relying on its absolute powers to play god?
• Unless the ERC can come up with some credible and believable reasons, then the Provisional Adjustment ought to be withdrawn and the case heard out to its conclusion expeditiously.
   

10 REASONS WHY ELECTRICITY BILLS ARE HIGH by the FDC

• 03/21/09 - Non-adversarial venue opened
  Upon the suggestion of the ERC Commissioner who presided over the NPC/PSALM rate application hearing, petitioners with their lawyers agreed to hold dialogues with intervenors a few days before the next hearing/s in Cebu by the middle of next month, April.  Commissioner Jose C. Reyes made this suggestion at the end of the two-day public hearing of ERC Case 2009-004 RC.
  
  Check this space again next week for more details and information on what this activity is all about.
  (or send email to intervenor[at]reklamo.ph to subscribe for updates)
  
   
• 03/21/09 Visayas traders, power coops nix rate hike
  "CEBU CITY, Philippines—Business groups, three electricity cooperatives, a nongovernment organization and local officials are opposing the plan of the National Power Corp. (Napocor) to implement a power rate increase in the Visayas."Read more...
   
• 03/19/09 Power rate hike hearing on; groups to stage protest
  "PROTEST rallies by different sectors will greet officials of the Energy Regulatory Commission (ERC) who will hold a hearing on the petition filed by the National Power Corp. (NPC) to increase its rates." Read more...
   
• 03/17/09 Power rate up by April
  "CEBU City, Philippines - Bad news for electric consumers in Metro Cebu.
  Starting April, an average household that consumes 176 kilowatt hours (kwH) monthly will have to pay about P200 more on its bill." Read more...
  Mag-hearing pa gani ugma ang ERC, ana-a na sa mga pamantala-an nga aduna na'y aprobado nga rate increase ang NPC ug gi-bandilio na sa VECO!  
  
  At first, what to us appeared as "premature ejaculation" on the part of VECO was confirmed as a fact after we insisted that there could not be any announcement unless the ERC had issued an order.
  
  Atty. Bontuyan of ERC Cebu could not give us any answers; "he had not yet read the newspapers", he told us.  He just came from the airport where he met the ERC Commissioner assigned to hear the NPC petition the following day.
  
  After reading the bold headline on the April rate increase, we called up the ERC Public Information Service in Manila to seek clarification about the news item.  PIS Director Francisco S. Villa, Jr. could not answer our concerns but he immediately sent us a copy of the NPC petition filed last Jan 16.  The document explained what had happened previously and how the ERC had acted on a prior NPC petition dated June 22, 2004 through a decision for a final rate on April 13, 2005.
  
  Why would a power rate increase be announced when the ERC had scheduled for a two-day public hearing on the NPC petition?
  
  We had to rewrite this section of our commentary after our last-ditch effort to answer our own question gave us the facts.  We called up the PIS again in the afternoon.  Mr.  Rolando S. Barza lost no time in searching for the information we wanted.  And in less than ten minutes we received a copy of the ERC order dated Feb 16 granting a provisional rate increase to NPC. [I repeat a previous observation I made on the ERC PIS - it is the only public information office where I have encountered people that seem to know their jobs].
  
  If you have more concerns about this issue, perhaps you can attend the succeeding ERC hearings and raise them up with the hearing officer.  Schedules are  posted on the right hand side of this page.
  
   
• 02/27/09 VECO CPCN extended up to September 24, 2030
   ERC grants VECO the extension of its Certificate of Public Convenience and Necesity (CPCN0 to continue operating its electric light and power system in the Cities of Cebu, Mandaue and Talisay and in the Municipalities of Consolacion, Liloan, Minglanilia, naga and San Fernando, all in the Province of Cebu, until Semtember 24, 2030, to coincide with its approved congressional franchise. Read the Decision here..( furnished through the ERC's Public Information Service.)
• 02/26/09  ERC dismisses VECO rate application
  ERC's Public Information Chief Atty. Francisco S. Villa, Jr. wrote to inform us that "the petition of VECO for the recovery of the cost of sub-transmission assets purchased from TRANSCO with prayer for provisional authority was dismissed."  This, a few days after we inquired about the status of the petition which was provided to the Cebu City Council in August last year.
  It may just be a temporary delay in the petitioned rate increase because the ERC expects VECO to apply for "recovery of costs incurred in the distribution utilities' CAPEX (shoud be) incorporated in its application for rate adjustment to be recovered in the distribution charge" any time in 2009.  Read the Order of Dimissal here.......
• 08/23/08 Cebu City Council to oppose Veco’s proposed rate hike
  Anational law that enables power utilities like the Visayan Electric Co. (Veco) to collect a “universal charge” from consumers should be looked into further, said Cebu City Councilor Gerardo Carillo.
• 08/21/08 Power theft rampant in 14 brys.; Veco ‘lectures’ dads on bill details
   POWER pilferage is rampant in 14 mostly depressed barangays of Cebu City, the Visayan Electric Company (Veco) told the City Council yesterday.
• 08/21/08 Veco explains charges to Cebu City Council
   Officials of the Visayan Electric Company (Veco) appeared before the Cebu City Council yesterday to explain the billing that the consumers receive monthly.
• 08/07/08 ERC sets consultations in Cebu on systems loss
  The Energy Regulatory Commission has set two public consultations in Cebu relative to its draft resolution, which proposes that electricity consumption of distribution utilities should be treated as expense and not as part of systems loss.
  Consultation with distribution utilities is scheduled on August 26 while another one with consumers in the Visayas and Mindanao is scheduled on September 3. Both consultations will be at 9am at the National Transmission Corporation office in barangay Banilad.
• 08/05/08 To recover P22 M in foreign exchange losses: VECO to increase electricity rates
  Electricity consumers in metropolitan Cebu should now expect an increase in their bills after the Energy Regulatory Commission approved the petition of the Visayan Electric Company Inc. for the recovery of its Incremental Currency Exchange Rate Adjustment (ICERA).
  When? VECO was not yet sure, said the company’s spokesperson Ethel Natera, as the management has been still discussing on the exact date it will be carried out. VECO has just received the copy of the ERC order only last month, she said.
• 07/13/08 Anti-graft crusader wants refund from power firms
  THE founding chairman of the Volunteers Against Crime and Corruption (VACC) yesterday said they will launch in Cebu the Refund Movement to pressure power distribution utilities and cooperatives to refund consumers of payments illegally collected from them.
• 070808 - Veco rates to remain unchanged until ERC process ends in 2009
   CUSTOMERS of the Visayan Electric Co. (Veco) can breathe easy, at least, between now and the end of 2009 as it waits for the completion of the process in which the Energy Regulatory Commission (ERC) evaluates and approves applications for rate increase.
• 06/30/08 POOR FAMILIES ENJOY BENEFITS OF "PANTAWID KURYENTE: KATAS NG VAT" PROGRAM
   As of June 28, 2008, some 650,250 claimants have been served in Metro Manila, Region III, and Region IV-A. The amount disbursed now reached P325,125,000 broken down as follows: 432,737 claimants in NCR; 66,828 in Region III; and 150,685 in Region IV-A.
• 06/19/08 City Council asks Veco to explain fees on electric bill
  THE Cebu City Council yesterday decided to ask the Visayan Electric Company (Veco) to orient them on the fees listed on its monthly bill.
• 06/19/08 - More info needed about Veco bills
  SYSTEM losses and electrical surcharges were two of the major concerns tackled by the Cebu City Councilor in yesterday’s regular session.
• 06/18/08 - Shedding light on Veco's bill
  With Meralco's high power rates in the nmews, consumers in Cebu are looking with closer interest at their bills from the Visayan Electric Company (VECO).
• 06/06/08 - Estrella Elamparo's error
   GSIS chief legal counsel Estrella Elamparo was wrong to say that Winston Garcia's family in Cebu are in no way involved in the operations of Visayan Electric Co. (VECO), the Cebuano version of Meralco. She went public recently in an attempt to fool consumers that Winston Garcia has no hidden agenda whatsoever.

 

DIALOGUE BETWEEN NPC/PSALM
with Intervenors & Oppositors
April 17, 9 am
Holiday Plaza Hotel
F. Ramos St., Cebu City
__________________
ERC hearings, 9 am
April 21 & 22
same venue

 

Links
ERC website
ENERGY REGULATION COMMISSION

Schedule of Hearings
 In the Matter of the Application for the Approval of the Proposed New Basic Generation Rates for Luzon, Visayas and Mindanao Grids with Prayer for Provisional Authority
Applicant: NPC

Jan 16 - NPC Petition filed
Feb 16 - Provisional Authority granted by ERC
Feb 24  - ERC Hearing Room
Feb 25 - Sequiaoa Inn, Function Room, Ground floor, Monteverde St., Davao City
Feb 26 - Sequiaoa Inn, Function Room, Ground floor, Monteverde St., Davao City
Mar 2 - ERC Hearing Room
Mar 9 - ERC Hearing Room
Mar 11 - ERC Hearing Room
Mar 11 - Proposed Revised Plant Heat Rates for LUZON, VISAYAS, & MINDANAO
Applicant: TRANSCO
VENUE: ERC Hearing Room
Mar 13 - ERC Hearing Room
Mar 16 - ERC Hearing Room
Mar 19 - 9:00AM, Holiday Plaza,Annex Hall, 2nd Floor, F.Ramos St., Cebu City
Mar 20 - 9:00AM to 5PM - Holiday Plaza,Annex Hall, 2nd Floor, F.Ramos St., Cebu City
Mar 24 - 2:00PM -  Proposed Revised Plant Heat Rates for LUZON, VISAYAS & MINDANAO - VENUE: Raffy eduardo Aboitiz Development Study Center, 35 Lopez Jaena St., Cebu City
Click here for petition
Mar 25 - 9:00AM - Proposed Revised Plant Heat Rates for LUZON, VISAYAS & MINDANAO -  Raffy eduardo Aboitiz Development Study Center, 35 Lopez Jaena St., Cebu City
Mar 31 - 2:00PM - Session Hall, City Hall, City Hall Drive, Davao City
Apr 1 -9:00AM -  Session Hall, City Hall, City Hall Drive, Davao City
Apr 23 - 9:00AM -  ERC Hearing Room
Apr 24 - 9:00AM to 5:00PM - ERC Hearing Room

Click here to confirm schedules at

• 06/03/08 - The Garcias, the Aboitizes and Meralco
   This refers to an article written by a Mr. Perry Diaz which came out in Inquirer.net last May 23, 2008. The article refers to an alleged “Arroyo-Lopez War” but contains statements which are completely unfounded insinuations relating the Aboitiz Group of companies as well as the Visayan Electric Co. Inc. (VECO) to the issues involving MERALCO and Mr. Winston Garcia

 

• 05/25/08 Should We Pay Meralco's Systems Loss Charge?
  .....To make things simple, systems loss is the difference BETWEEN the total power generated by the plants AND the sum of all the power ACCOUNTED FOR in the residential, commercial and industrial electricity bills. Not all is stolen, though....
• 05/24/08 Veco, other firms ‘need to explain’ systems losses
  SENATE President Manuel Villar said owners and officials of other power distribution companies in the country may be summoned to explain why they are collecting more than the actual consumption of their clients.
• 05/20/08 The Arroyo-Lopez War
  ......in addition, the Garcia family has large stockholdings in the Aboitiz-owned Visayan Electric Company (VECO), the country's second largest private electric utility. The corporate officers include three Garcias, to wit: Dennis A. Garcia, President and General Manager; Ramontito A. Garcia, Treasurer; and Jess Anthony N. Garcia, legal counsel and Assistant Corporate Secretary. Of the 11 members of the VECO Board of Directors, five are Garcias, namely, Dennis N.A. Garcia, Ramontito E. Garcia, Gil A. Garcia II, Charles Sylvester A. Garcia, and Antonio V. A. Garcia de Escaño. The Aboitizes, have five members of the Board. Recently, a news account reported that Winston Garcia is serving VECO as a lawyer on retainer. The question is: What would VECO -- and Winston Garcia -- stand to gain if Meralco were broken up into smaller companies?
• 05/11/08 - MERALCO vs the MAFIA
  Look, as I was searching the AEV website for VECO, to see how much VECO charges for system losses. (I know this from a website I visited to be about 8.14% which is actually higher than Meralco's most recent billing - about 7.8%) instead, I stumbled upon this page wherein the last line says, "VECO is owned and managed by the Aboitiz and Garcia families of Cebu."  
•  08/16/06 SC Orders Meralco to Refund Consumers Affected by Nixed Adjustment Increase
   The Supreme Court has ordered the Manila Electric Company (Meralco) to refund to the affected consumers the amount of Php0.1327 per kilowatt hour (kWh), representing the unauthorized increase from Php3.1886 to Php3.3213 per kWh under the nullified Energy Regulatory Commission (ERC) Order, dated June 2, 2004 in ERC Case No. 2004-112.
•  04/09/03 - Supreme Court Decision - ERC vs MERALCO, G.R. No. 141314
   "In its decision, the ERB, after authorizing MERALCO to adopt a rate adjustment in the amount of P0.017 per kwh, directed MERALCO to refund or credit to its customers’ future consumption the excess average amount of P0.167 per kwh from its billing cycles beginning February 1994[33] until its billing cycles beginning February 1998.[34] In the decision appealed from, this Court likewise ordered that the refund in the average amount of P0.167 per kwh be made to retroact from MERALCO’s billing cycles beginning February 1994."."