SOLECO bats for power rate hike to attain efficient electric service

By BONG PEDALINO (PIA Southern Leyte)
June 17, 2009

MAASIN CITY  –  Electricity consumers in this city and the whole Southern Leyte province are in for a bitter pill to swallow.

The Southern Leyte Electric Cooperative (SOLECO) is eyeing to raise its power rates to finance a number of capital infrastructure projects this year at the earliest, all designed to deliver efficient electricity, said Rosello Gerong, General Manager.

Among SOLECO’s initiatives now under consideration are its normal projects consisting of upgrading on distribution lines, transformers, electric posts and other related materials and accessories which cost P13 Million, Gerong said during the public consultation held Thursday at the Casa Ampil here.

Another set of development thrusts, called major projects, covered rehabilitation/revamp of distribution lines, costing P26 Million; the rehabilitation of the mini-hydro in Saint Bernard, P20 Million; and the upgrading of the sub-station at Saint Bernard from 5 MVA to 10 MVA, P27 million, for a total of P73 Million.

And on top of it all, Gerong disclosed that SOLECO has a mega project, which is the purchase of the Transco-owned transmission line from barangay Tam-is up to its door, at a cost of P120 Million, to be amortized in twenty years.

The public consultation, dubbed rules for setting the electric cooperatives’ wheeling rates (RSEC-WR), was held in coordination with the Energy Regulatory Commission (ERC), with ERC Commissioner Jose Reyes attending.

Reyes explained that the suggested rates as presented at length by two personnel of the ERC was meant to make life easier for the 119 cooperatives all over the county as their benchmark in the process of asking rate increase in the distribution, supply, and metering (DSM) component of the power industry.

With SOLECO classified as belonging to the “B” class of the country’s electric cooperatives, Reyes said the increase for this group as to their DSM was .4004 to be implemented in staggered basis for three years starting September this year.

When it was SOLECO’s turn to present its desired rate, Gerong said the ERC-suggested hike was way too low compared with its actual need for capital expenditure funding as outlined earlier.

Gerong stressed that SOLECO has been paying P2.9 million per month to Transco on transmission charges, also known as monthly rental, for the power delivered in its KV line, or P34.8 million per annum.

If the KV line can be bought for an amortization of P6 million a year for twenty years, with additional maintenance cost of P5 million per year, the cost of maintaining the KV line once SOLECO would own it would only be P11 million per year, Gerong added.

Two City Councilors present during the hearing had other views.  Councilor Nestor Sy suggested that SOLECO approach local government units for help in defraying the monthly cost of paying the transmission charges, adding that there’s no guarantee of better, investor-friendly service even if the power utility purchases the KV line.

City Councilor Rene Hatayna, for his part, also opposed having any increase for now, saying the people have been hit hard and reeling from the global and local financial crisis.

Gerong, however, countered that efficient power service does not necessarily mean cheap rates, saying that for Southern Leyte province and the city the trend has been in the services industry sector and eco-tourism, areas that require stable electricity and efficient service.

The rest of the audience, composed mostly of barangay officials and representatives of offices and the private sector, raised their hands to agree with SOLECO’s impending rate increase.