FAA OnLiNe

Sunday, December 11, 2005

ERC INTERVENES


PPC assistant vice president Andy Moncada and Mirant vice president Arman Lapus meet with Rep. Raul Gonzalez Jr.



ALBANO: ‘PECO MUST PAY PPC’

By Francis Allan L. Angelo

ILOILO City might just spend Christmas in a brighter setting with the Energy Regulatory Commission (ERC) stepping in the “financial fray” between Panay Power Corporation (PPC) and Panay Electric Company (Peco).
ERC chairman Rodolfo Albano said they will issue a provisional authority early next week to compel Peco to pay PPC what is due the power producer so it can continue to supply electricity to the city.
Earlier, Mirant Global Corporation vice president for Visayas New Business Arman Lapus and PPC assistant vice president Adrian Moncada said they cannot sustain the operation of the 72-MW diesel-fired power plant at Barangay Ingore, LaPaz after Peco cut its rate P2 last September.
Lapus said Peco owes PPC more than P360million which has affected their fuel supply from Shell Corporation.
“Our fuel stock is only up to December 15. Shell won’t deliver Bunker C fuel if we cannot pay our outstanding accounts. And if we cannot purchase fuel before December 15, we will have to shut down the plant,” Lapus said.
But Albano said Peco cannot pass on to the consumers the amount it will pay PPC.
“Peco must pay PPC the actual cost of power. But they cannot charge that to the consumers until we have made a decision on their petition for rate increase,” Albano said in an interview with Aksyon Radyo station manager John Paul Tia Friday evening.
If Peco resents the order, Albano said the distribution firm must present a valid reason why it will not follow the provisional authority.
The ERC chief said the order is now being routed to his fellow commissioners for their signatures.
“The order might be out either on Monday or Tuesday,” Albano said.
Albano said the commission’s action was similar to the solution they made on the problem of Cebu Private Power Corporation (CPPC) which accounts for 20 percent of the Cebu’s power requirement.
CPPC was also on the verge of shutting down as Visayas Electric Cooperative was paying the former less than the actual cost of power.
“This will ensure that there will be no blackout on December 15 as what PPC and Mirant are saying,” Albano said.
Pressures
Apparently, pressures from Iloilo and national leaders forced ERC to avert the power blackout in the city.
Since yesterday morning, Governor Niel Tupas was burning the lines to compel Albano to solve the power crisis.
“My constituents might be in the province but the provincial capitol will be severely affected by the blackout. Being a consumer also, I made my own move to solve this problem. Rest assured that there will be no blackout next week,” Tupas said.
On Wednesday, Iloilo City Representative Raul Gonzalez Jr. wrote President Gloria Arroyo and asked her to temporarily take over PPC to avert the blackout.
Reports from Manila said the President also called up Albano upon receiving Gonzalez’s letter.
Lapus and Moncada met with Gonzalez yesterday to explain the actual situation of PPC.
Gonzalez said he sent the letter to the President “just in case something happens.”
But Lapus assured Gonzalez that they will continue to operate if ERC issues a “win-win solution” to their problem.
“We are not blackmailing the consumers and our leaders. In fact, we are being open and honest to the people about the real situation of the plant. As well-meaning businessmen, we want to be transparent to our consumers. If the ERC decision will give us a leeway to buy fuel from our supplier, we can continue supplying power to the city,” Lapus said.
Good news
Meanwhile, Moncada said the ERC’s provisional authority “is good news.”
“The order can be strong collateral to our creditor and supplier. But it will depend on Shell’s policy if they will deliver fuel on basis of the ERC decision or they will demand for cash,” Moncada said.
But Moncada said it will “be premature say that we will not shut down the plant until we have seen the ERC order and ascertained its implementation.”
“What we need right now is something that will convince Shell that we can pay them for the fuel we will purchase. Or we can also go to the bank to borrow money using the ERC order as an assurance that we can pay them back. Early on, we have arranged with Shell to make sure that they have enough fuel to supply to the plant,” Moncada said.
However, Atty. Honorato Sayno said the ERC can only regulate rates of power distribution firms “but it cannot intervene if how we will pay PPC.”
“But we will first see the content of the order before we make our own move,” Sayno said. (Published in The Guardian, December 10-11, 2005 issue)

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