Discrepancies in APEC’s High Electricity Bill Burdens Albayanos

“Yammy” Imperial, 48 years old, from purok 2 Divino, Tabaco City expresses her frustration as she persistently goes through a jar full of long papers. She picks up two of her past electrical bills: for the months of October and November.

“Ito, yung October 987 tapos noong nakaraang buwan, 1,017 ang binayaran naming bill. Mataas na to [para sa amin] dahil tatlo lang naman kaming nakatira dito, konti lang ang gamit. Di ko alam kung bakit [ganiyan].”

Yammy lives in a 1-bedroom apartment with her son and husband who is a low-paid worker in the city hall. She owns a small sari-sari store in front of her house which is their family’s alternative source of income.

“Regular kami magbayad, minsan nahihirapan kasi gusto nila pagbigay ng bill bayad agad, eh yung sweldo ng asawa ko buti kung on-time, eh delayed din,” Yammy said.”

With a tight budget, she is constantly challenged every month to pay for everything: food, rent, water bills, and medication for his husband with asthma.

“Grabe naman sila, pinapatay na nila yung tao, wala nang ibang pupuntahan ang pera mo kndi bill,” yammy said. “Di naman pwede maputulan kasi siyempre kailangan eh, lalo na yan (points to her husband), kailangan ng nebulizer.”

Her family is only one of the thousands of families in Albay who are burdened with the persistently high electricity rates of the Albay Power and Energy Corporation, the private concessionaire of the Albay Electric Cooperative (ALECO).

On the other side of the coin, APEC dodges the blame and points out the expensive electricity rates of generators which they claim they have no control over, illegal disconnections, and delinquent customers to be the causes of the spike in the electricity bills of the consumers in the province.

However, questions about honesty and validation of their billing processes arose especially after the significant increase in the cost of electricity in the province halfway through this year.

High generation rates equal high generation charges

Last June 21, APEC announced through its Facebook page the updated power rates for the said month. The overall rate for a common household increased by Php 3.2695 per kilowatt-hour; from 10.6844 pesos per kWh in May to Php 13. 9539 in June.

To illustrate, if a typical home consumes 100 kWh, it will have a bill of Php 1068.44 for May and Php 1395.39 for June. That is an added expense of 326.95 for the same amount of power consumption.

The huge increase in the electricity bill led to people complaining and questioning APEC’s metering and billing practices. They demanded the corporation explain the issue.

In an attempt to clarify the situation, APEC released a statement last June 24 and said that the reason for the high electricity bill is the increase in the power rate from their main power supplier for the month—the Wholesale Electricity Spot Market or WESM which led to the increase to their generation charges

Generation charges account for 57 percent of the total electricity bill along with universal charges set by govt for renewable energy development.

APEC explained that generation charges are only passed on to the customers based on the rate given by suppliers. This means that they have no control over it and are not allowed to collect them as income.

As indicated in the statement, generation charges went up by Php 2.7338 per kWh in June, from Php 5.9375 per kWh to Php 8.6712 per kWh

According to them, two factors affected the upsurge of WESM charges: the increase in demand implicated by the low supply of energy due to generation plant outages in Luzon.

WESM’s summary report on the same day aligns to that of APEC’s. According to it, consecutive generator outages and deratings resulted in the thinning of the power supply and consequently doubled up the Effective Settlement Spot (ESSP) for the month of May to Php 8.3 per kWh from Php 4.04 per kWh last April.

WESM is a spot for trading electricity as a commodity. Section 30 of R.A. 9163 or the Electric Power Industry Act of 2001 (EPIRA) mandates WESM to be the avenue wherein power generators offer to sell excess energy outputs that are not covered by contracts.

Prices here are determined mainly by corresponding the supply of the generators to the demand and capacity of market participants. This is regulated through the Price Determination Methodology approved by the Energy Regulatory Commission.

APEC District 1 Manager Janet Alcayde explained in an interview with the reporter that fluctuations in power rates usually happen and that it depends on the movement of supply and demand in the market.

“Kung ikaw ang manufacturer, kung kaunti ang demand pero marami kang supply edi mura yan, pero pag marami ang demand konti ang supply mo tumataas ang bill,” she explained.

Electric supply discrepancies

Apart from WESM, distribution utilities, and electric cooperatives are also able to acquire power through bilateral contracts which are direct Power Supply Agreements (PSA) with major power generators such as the National Power Corporation and through Independent Power Producers or IPPs. In the case of APEC, they form a bilateral contract with their mother company, mother company San Miguel Energy Corporation (SMEC).

Under their rules updated as of June 2020, distribution utilities and electric cooperatives purchase required energy from WESM on top of those acquired through bilateral contracts. This means that customarily, the majority of the energy requirements are bought from PSAs than from WESM.

Even the National Electrification Administration advised distribution utilities to purchase a larger portion of needed electricity from other power suppliers to avoid persistent vulnerability to high and fluctuating WESM charges, especially during the course of the price hike in the first half of the year.

However, in the case of APEC, they initially said in the same press statement last June 24 that they were forced to source out all required power from WESM for the period of May to June because the Department of Energy denied their request last 2020, for an Emergency Power Supply Agreement (EPSA) with SMEC which would have allowed them to purchase power from SMEC in a lower stable price.

For June 2021, WESM price was at Php 12.84 per kWh while SMEC price was Php 6.70 per kWh.

“Full demand of APEC is sourced from WESM and the price of purchasing the base load, intermediate and peaking energy requirements from said market is costly at [these] times,” the statement said.

In an update last June 28, APEC announced that the DOE has decided to allow their EPSA with SMEC effective from the month of July. The average rate under EPSA is at Php 5.48 per kWh while the average rate for WESM is Php 6.851 per kWh.

“The DOE’s denial of the requested left APEC with no choice but to source all its power requirements from WESM for a time,” the statement said.

“The reason why we wanted to pursue the EPSA is to ensure that we will have a stable supply of electricity from SMEC at a very affordable and stable power rate.”

However, discrepancies arose regarding APEC’s honesty and transparency in their justifications for the rate increase specifically regarding their generation charges.

On July 7, Ako Bicol Partylist representative Alfredo Garbin wrote a letter asking the Energy Regulatory Commission to probe the “questionable” increase in electricity rate in Albay.

According to the letter, upon request, he was able to get his hands on the data from the Independent Electricity Market Operator of the Philippines Inc. (IEMOP), in charge of WESM’s operations, on the transaction made by APEC, particularly for the period of April to June 2021.

Garbin claimed that for the period of May-June 2021, only 24.09% of APEC’s electricity supply was purchased from WESM and 75.91% was from a bilateral contract. This is contrary to their earlier pronouncement that they were forced to buy 100% from WESM for the same period.

In another press statement released by APEC in response to Garbin’s letter dated July 11, they welcomed an audit investigation by the ERC. They insisted that the issue was caused by the increase in the generator’s rates particularly of WESM.

Apec clarified Garbin’s claim by presenting a table of their transaction for the period. It was shown that the 28 million kWh acquired from SMEC amounted to around 147 million pesos. On the other hand, the 19 million kWh purchased from WESM amounted larger to 254 million pesos.

APEC clarified that 60% of the energy was purchased from SMEC and only 40% from WESM but the payment was larger for WESM at 63% than SMEC at 37%.

However, APEC denied that they purchased 100% of their energy from WESM. “APEC will never allow itself to purchase 100% of its energy demand from the electricity spot market,” the statement said. “High-risk exposure to WESM will make us vulnerable to a sudden electricity price surge…”

To this day, ERC has yet to respond to Garbin’s audit investigation request.

Blaming the consumers

Another complaint in Albay is the high system loss rate being passed down to the APEC customers. It accounts for 8% of the total electric bill.

System losses as defined by the ERC are energy lost and unutilized either through the transmission of energy (technical loss), energy lost due to pilferage, metering errors, and meter tampering by people (non-technical), or the administrative loss which is composed of the energy used by the distribution utility itself.

Under ERC’s Resolution No. 20, Series of 2017 which is effective from 2018 to 2022, the system loss cap is set at 8.5% for distribution utilities and 13% for electric cooperatives. For APEC the current cap is at 10%.

In Albay, a large part of the system loss is due to the proliferation of illegal disconnection and delinquent customers. In the same press briefing held last July 15 in response to Garbin’s letter to ERC, COO Alvarez explained that this is also a reason why electricity rates are high in Albay.

According to data given by APEC in a press briefing held last May, they are losing 1.6 billion pesos to system loss a year.

“Kapag tumataas po ang generation rate na ibinibigay sa atin, kinakabahan na po ako, dahil di naman tumataas ang dami ng nagbabayad, lumalaki lang po ang aming abono,” Alvarez said. “Ang binibili namin 48 million kwh ang naco-collect namin equivalent lang sa 29 million kwh.”

APEC’s efficiency before was only at 74%. This meant that out of the 205 000 customers in Albay only 151 700 are paying.

In an interview with the reporter, District Manager Alcayde further explained that despite APEC’s intention of upgrading the utilities, their income goes to compensating for the system loss instead.

“Sa total na system loss natin sa Albay 10% lang doon ang binabayaran ng mga tao, yung excess kami na ang sumasalo,” Alcayde explained. “Pag hindi naming nako-collect yung iba naming operations nasa-sacrifice kasi imbes na makabili ng materyales inuuna yung pagbayad sa supplier.”

To address the issues, APEC has started a Mass Disconnection Program which started last February 10 in coordination with the Philippine National Police in the province to find illegal connections. As of July, they have cut off the power of 35 000 illegal connections and negligent customers.

Last May they released a list of top barangays in Tabaco and Tiwi with huge arrears and the most illegal use of electricity. Tabaco had arrears amounting to Php 218 million while Tiwi had around Php 48 million. These barangays were subjected to disconnection if they were not able to pay their balances.

The entire barangay of Bacolod was cut off from power last May. Out of 208 customers there, only 6 were paying regularly. Bacolod had an outstanding balance of around Php 8 million. This became an issue because APEC cut off the electricity even of regular paying customers.

Apart from this, they have also implemented starting September this year the One Bill Policy which means that if they are not able to pay the given bill before or on the due date, they will be given a notice of disconnection immediately and will be given a 24-hour window to settle the bill. Otherwise, they will be disconnected.

Three months into its implementation, Atayde said that APEC’s collection efficiency has already climbed up to 87-90%.

However, consumers are complaining that the policy might be too harsh including Yammy from Divino who experienced disconnection after not being able to beat the due date last month.

“Pwede sana pagputol pagdating na ng pangalawa na lang kasi pag naputulan ka kahit nakabayad ka na ang tagal ibalik ng connection,” Yammy said. “Nagsikap kang bayaran kasi kailangan na nga tapos umaabot pa ng dalawang linggo bago balikan? Pagdating ng bill magbabayad pa ng 200.”

Despite efforts to improve system, no significant improvement to date can be observed. Rather than them being mitigating, APEC’s combatting strategies to the high electricity rates in the province adds to the burden of the people in Albay.

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