THE ENERGY Regulatory Commission (ERC) has rejected the petition of Oriental Mindoro Electric Cooperative, Inc. (Ormeco) for provisional authority to collect an added charge to its customers to recover the cost of generating power from its hydroelectric plant.
Ormeco in its petition dated Oct. 16, 2020, asked the ERC to allow the recovery of cost for the power generated by its 3-megawatt Linao-Cawayan Mini-Hydro Power Plant-Upper Cascade.
It said the ERC’s approval would lessen the effects of retail rates charged to member-consumers who incurred higher energy tariffs.
In an order dated Jan. 29, the ERC said that it denied Ormeco’s petition, citing that the electric cooperative did not secure prior approval from the commission for its generation rate charges. It also cited the substantial delays in the filing of the application, among others.
“The allegations in the application show that Ormeco has been operating the [hydro plant] to supply electricity to its captive customers without an approved generation rate from the Commission,” the ERC said.
It added that the commission did not have the opportunity to evaluate whether Ormeco was supplying electricity “in the least cost manner before charging retail rates.”
Republic Act No. 9136 or Electric Power Industry Reform Act of 2001 (EPIRA) mandates distribution utilities to supply power at the “least cost to its captive market, subject to the collection of retail rate.”
The ERC said that because Ormeco charged its member-consumers for its hydro plant’s generation rate, which did not have the commission’s prior approval, the electric cooperative “violated” the law.
The regulator also cited “substantial delays” between the filing of Ormeco’s petition and granting of provisional authority to operate, which the power utility received six years ago.
“It must be noted that it was only 16 October 2020 that Ormeco filed the necessary application for the approval of the generation rate recovery,” the ERC said.
The ERC added that Ormeco had enough contracted power supply to address the surge in demand in its franchise area, as seen in its submitted demand-supply scenario, which included historical data from 2018 to 2019 and forecasts for 2020 up to 2025.
The ERC ordered Ormeco to submit its hydro service contract for the power plant and its water permit issued by the National Water Regulatory Board.
It also directed Ormeco’s management and board of directors to explain under oath why they should not be penalized for failing to secure prior approval from the ERC for the generation rate and provide electricity in the least costly manner.
The ERC said that Ormeco must submit its explanation within 15 days from receiving the order, “under the threat of penalty.”
The order was signed by ERC Chairperson and Chief Executive Officer Agnes VST Devanadera on Dec. 17, 2020, and promulgated on Jan. 29, 2021.
In October, Ormeco was identified by the National Electrification Administration as one of the electric cooperatives that sustained losses due to Typhoon Quinta (international name: Molave). — Angelica Y. Yang