LANAO POWER CONSUMERS FEDERATION (LAPOCOF)

GAD Center, Brgy. Hall Bagong Silang, Iligan City Tel: (063) 221-5252; Mobile 0932 888 3114

The Implications of the Power Supply Agreement (PSA)

between ILPI and Mapalad Power Corporation

On June 4, 2013, there was an Energy Regulatory Commission (ERC) Public

Hearing (PH) at the Fontina Café, Iligan City with regards to the Power Sup-

ply Agreement (PSA) between Iligan Light and Power, Inc. (ILPI) and

Mapalad Power Corporation (MPC formerly the Iligan Diesel Power Plants).

Provisional Authority (PA) has already been granted by ERC last May 9, 2013

without any Public Information.

The rate applied for by MPC is at Php9.5069/kwh.

On June 11, 2013 there will be a Clarificatory Meeting between ILPI/MPC and

the Intervenors/Oppositors at Fontina Café, Iligan City, after which ERC or-

dered that parties are to submit their Positions.

On June 18, 2013, a follow up ERC PH is scheduled here in Iligan based on

the Positions submitted. There is no definite venue yet.

On top of the above PSA between ILPI and MPC, a PA (Provisional Authority)

was granted by the ERC of the PSA between ILPI and Mapalad Energy Gen-

erating Corp. (MEGC is owned by the stockholders of ILPI).

The chronology of events are as follows:

March 18, 2011 = ERC PH was conducted in Iligan City for the PSA be-

tween ILPI and MEGC.

May 9, 2011 = ERC granted a PA of the PSA of ILPI and MEGC,

April 10, 2012 = The Iligan LGU and LAPOCOF filed for a Motion to Re-

call the PA,

July 6, 2012 = another ERC PH conducted in Iligan City for the Motion

to Recall wherein Iligan LGU and LAPOCOF submitted a Position Paper.

Aug 17, 2011 = ILPI submitted to the ERC their reply to our Position

Paper.

Sept 12, 2011= LAPOCOF submitted its rebuttal to the response of

ILPI.

As of today, we have not received any information of any action from the

ERC with regards to our Motion to Recall the PA.

The rate applied for by MEGC is at Php10.4495 / kwh.

SITUATIONER:

Before May, 2013, ILPI has only one source of power supply, which is from

NPC at 15.732mw.

Other Distribution Utilities (DUs), such as Davao Light/CEPALCO/COLIGHT/ FIBECO had the foresight and business acumen to put up their own genera-

tors. Their franchise areas are not suffering brownout with an electricity

rate which is the average for Mindanao.

Also, if only ILPI sourced power from Therma Marine, again our brownout

would have been mitigated.

On top of that was/is our suffering, inspite of the presence of the Iligan Die-sel Power Plants (IDPP) in our doorsteps.

LAPOCOF has been against its sale, and has made several engagements and

communications with the LGU, DOE, up to Pres. Aquino, of the immediacy of running it since 2010.

If put on stream in 2011, there would have been no brownouts in 2011,

2012, 2013.

Because of the non-functioning of the IDPPs, ILPI had a reason to set up

MEGC ,which has a rate impact that is exorbitantly expensive, and if im-

posed, will make Iligan the highest in Mindanao.

MPC has started supplying ILPI 10-MW since May 9, 2013.

By July or August, MEGC will also start supplying ILPI with 12.75-MW.

What is the difference between MPC and MEGC? MPC is for Emergency Supply of Energy for a period of three years. There is no Minimum Energy Off Take (MEOT), which means that we pay only for electricity utilized. We need not pay for electricity that has never been pro-duced and never been used. When cheaper and more environmentally friendly Power Supply comes, in 3 or 4 years hence, then we consumers can prod ILPI to shift. Rate is at Php1.24/kwh.

Contract with MEGC is fixed for 20 years, even if cheaper energy is already

available from other sources, such as from Agus 3 and other Hydro Plants. It has a MEOT provision. Meaning, we pay for the electricity that has never

been produced, and never been used. As of now, the rate is at

Php2.12/kwh.

In table form:

(in Php / kwh)

Supplier Rate Rate Mixed with

NPC (Energy Formula used)

Rate Impact

Generation Rate Only

Distribution, Transmis-sion, etc.

Total Power Bill

NPC/PSALM 3.13 3.13 NPC 3.13

+3.40 6.53

MPC 9.50 4.37 1.24 NPC + MPC

= 4.37 +3.40 7.67

MEGC 10.44 5.25 2.12 NPC + MPC + MEGC =

6.49 +3.40 9.89

The bottom line is that our electricity bill:

April to May = Php3.13/kwh from NPC + Php3.40/kwh from other

charges = Php6.53/kwh.

May to June = Php3.13/kwh from NPC + Php1.24/ kwh from MPC =

Php4.37/kwh + Php3.40/kwh from other charges = Php

7.67/kwh. (Since MPC has started supplying ILPI 10mw since May 9,

2013.)

July or August = Php3.13 from NPC + Php1.24/kwh MPC + Php2.12

from MEGC = Php6.49/kwh + Php3.40/kwh from other charges =

Php9.89/kwh (By July or August, MEGC will start supplying ILPI)

If a household consumes 300 kwh:

April to May bill is at Php1,959.00 (300kwh x Php6.53/kwh)

May to June bill will approximately be Php2,301.00 (300kwh xPhp

7.67/kwh.

July or August bill will approximately be Php2,967.00 ( 300kwh x

Php9.89/kwh)

Is there hope that this Provisional Authorities (PAs) can be overturned?

What can we do to correct the grim picture of us, consumers, burdened by

an exorbitantly high electricity rate, plus the scenario of no business setting

up in Iligan because of high electricity rate?

There are options.

One of which is to put forward a strong, well studied, convincing Position Pa-

per, which, hopefully will sway the ERC to overturn the rates in the PSA

which was already provisionally approved.

By:

Dr. Melchie Ambalong LAPOCOF

June 8, 2013