Entrepreneurial Farmer

Ambrosio R. Villorente

Akelco Gets 17 Centavos of Its Proposed
75 Centavos Rate Adjustment

The Energy Regulatory Commission (ERC) approved Akelco application "of its overall tariff adjustment in the amount of PhP0.7543/KWH, with prayer for issuance of provisional authority, is hereby approved".
ERC "granted a Total Revenue Requirement of PhP160,810,351.00 equivalent to an overall average rate adjustment of PhP0.1736/KWH on its total Distribution, Supply and Metering charges".
In simple language, Akelco applied with ERC to increase its rate by PhP0.7543/KWH on its total Distribution, Supply and Metering charges but ERC approved PhP0.1736/KWH, smaller by PhP0.5807.

Facts

Akelco filed its application with ERC on March 31, 2008 to increase power rate by P0.7543 per kwh. Public hearing was conducted regarding the application on May 15-16, 2008 in Akelco compound, Lezo, Aklan. The hearing was presided by Rauf A. Tan, Commissioner, ERC.
During the hearing, Ramil T. Dala, Lilian Q. Tirol, Ramon S. Gelito, Harvey Y. Reloj, Franklin Quimpo, Carlo Macahilig, George Calaor, Benny Q. Laserna and Romeo T. Inocencio filed their joint petition for intervention and pre-trial brief. They agreed with Akelco on a single issue which is: "whether or not the proposed overall tariff adjustment is just, prudent, reasonable and proper, and should be approved" by ERC.
To support its application, Akelco presented Paterno Ibarreta, Akelco Board President and Roselie R. Tarantan, manager for finance, Akelco. The two testified to support the Akelco application.
I thought the Akelco board members were elected by the consumer-members to protect their interest. In this case, the President of the Akelco board still insisted and dependent the application to increase its power charges to the consumers. For whom the members of the board working? I have not heard any board member consulting some member-consumers on rate increase application. Likewise, Akelco only furnished the copy of its application to some LGUs in Aklan.
The Diocese of Kalibo, the Sangguniang Panlalawigan of Aklan, and Sangguniang Bayan of Kalibo among others opposed the said Akelco tariff adjustment application with ERC.

Proposed Revenue Requirement

In 2006, Akelco has a total revenue requirement of P199,815,323.00. It proposed P211,823,571.00 or an adjustment of P12,008,248. This increase will be for salary standardization – P3,923,503; retainer’s fee – P5,555,040; and real property tax – P2,529,705. Wow! P5,555,040 for retainer’s fee. Is Akelco so notorious that it must require P5.5 million a year for retainers fee? To whom will Akelco pay this cold cash? Who are these retainers? This explains why the sum of more than P3 million was spent without any voucher and receipt alleged to have been disbursed as legal fee.
Please take note: Akelco proposed to spend P53,145,732 for personal services. ERC approved P49,678,971. ERC reduced it by P3,466,761.
Akelco proposed P110,598,588 for Operation and Maintenance, ERC approved P72,425,347, a P38,164,239 reduction. This is astronomical reduction for an astronomical proposal. Some 35 percent of the proposed amount was reduced.
Money intended for donations; solicitations and sponsorship; financial assistance and death aid; excess in advertisement expenses; excess in annual meeting; legal fees for non recurring cases; auditors adjustment for legal case; arrears on tax deficiency; expenses on bank charges; excess in uncollectible accounts; adjustment in outside services; and excess in annual real estate tax was disallowed. Does Akelco advertise and pays its advertisers?

Debt Service

As to debt servicing, Akelco proposed P20,393,020. ERC approved P10,313,467, a P10,097,553 reduction. Why did ERC reduced Akelco’s proposed amount for debt servicing by more than 50 percent? Is it bloated? Akelco management often announce it is indebted.
Akelco proposed to reinvest P32,389,207 for expansion and rehabilitation of electric power system. ERC found it meritorious. It approved it and even increased it to P33,253,119. (to be continued next issue) /MP