Council Sets Public Hearing Over Energy Hike

Power consumers in Metro Cebu will experience an increase in their electricity bills once the Energy Regulatory Commission (ERC) grants the application of the Visayan Electric Company (VECO) to pass on to the consumers the P34.2 million cost of a new transformer after lightning destroyed one of its transformers two months ago.

If the application of VECO would be granted by the ERC, the consumers will experience an increase of P0.0592 per kilowatt-hour in their monthly bills for a period of three consecutive months, excluding the Value Added Tax (VAT).

But the members of the Cebu City Council’s committee on transportation, energy, communications and other utilities are against VECO’s move. For the City Council, the power utility firm can also be considered negligent as far as the transformer’s incident.

VECO’s application to ERC dated June 20, 2013 seeks approval for the capital expenditure project for the repair and re-installation of the 1×100-MVA transformer (TR4) situated at the National Grid Corporation of the Philippines-substation in Cebu, claiming that it was destroyed because of force majeure.

Lyndon C. Jayme, the power firm’s assistant vice president for utility economics group, said their heavy duty transformer was destroyed by the series of lightning and thunderstorms that struck shortly before midnight last May 27. This has caused massive power interruptions in different areas according to Jayme.

The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAG-ASA) had certified that there were a series of thunderstorms accompanied by lightning that night.

Jayme said the result of the on-site electrical test conducted by Ohmnitek Power Corporation on the damaged TR4 transformer reveals that the damage were caused by external fire from lightning which is beyond the control of VECO.

To temporarily solve the power interruption, VECO had leased a transformer from Bohol for P1,217,034 every month. VECO claimed that the law allows them to pass on the amount to their consumers if the cause of the damage is due to force majeure.

But Councilors Nestor Archival and Roberto “Bob” Cabarrubias said it would be unfair if the entire amount will just be passed on to the consumers because the Electric Power Industry Reform Act (EPIRA Law) requires power firms to install lightning protections.

“They were supposed to be equipped with lightning protections such as lightning arrester devices and overhead ground wires which will cover the entire power substation, anticipating all possible pathways of lightning,” the two councilors said.

Cabarrubias said “considering the fact that the TR4 Transformer was damaged by the fire which was allegedly triggered by the lightning, then the said protection system is inadequate. Inadequacy hereof implies negligence on the part of the service provider.”

According to Archival, VECO should also shoulder the cost of the repair and re-installation of the damaged TR4 Transformer since it is part and inherent risk in business and should not be passed on to the consumers.

The City Council decided to call for a public hearing on August 14 before the start of the regular session where VECO officials will be asked to appear, as well as representatives of business groups, ERC andthe National Grid Corporation.