by ERNESTO T. SOLIDUM
The Weekly Kapihan on February 25, 2012 discussed, “Capital Expenditure Program of Akelco” held in Sopur Business Center, Punta Tulay, Bulwang, Numancia. The guests are Atty. Romeo P. Inocencio of Power Aklan and Mr. Lorenzo Laserna, Consultant, Akelco.
Atty. Inocencio said that Akelco’s manage-ment under Gen. Manager Chito Peralta has filed with the Energy Regulatory Commission (ERC) an application for capital expenditure of P564.3 million covering the period 2011 – 14. A public hearing on the subject was held on February 7, 2012 at Aklan Training Center, Buswang Old, Kalibo, Aklan. As an NGO, Power Aklan immediately applied as an intervener with ERC. Power Aklan cited its vigorous opposition to the conflicting issues and negative impact of increased power rates to consumers.
Based on estimates, the local power watchdog cited 2009 – 2010 where Akelco accumulated operating surplus of P74.2 million. By inference, this is capital gains and considered capital expenditure since it is re-invested in the form of machineries, equipment and other needs.
In the same vein, can this be returned to consumers in the form of discounts? Since item is membership contribution to capital expenditure can this be considered subscribed capital (as in the case of cooperative) the operating surplus be considered as patronage refund?
Atty. Inocencio underscored that Akelco is asking for provisional authority when it has started collecting from its 103,000 member consumers since January 2010 the minimum charge for capital expenditures (MMC) of 29 centavos per kilowatt hour (kwh). Once the new application for capital expenditure is approved, Akelco will ask its consumers to shell additional 23 centavos per kwh through “due process” making a total of 52 centavos. It must be remembered that this is a basic charge to which is ultimately added dis-tribution supply and metering charges.
Both Akelco and ERC have a set of rules that confound businessmen and outsiders alike. For instance, periodic maintenance clearing of power lines couldn’t be considered capital expenditure but operating capital. In another issue why include a stupendous permit fee of P4.2 million since coops are not operating for profit but service?
Legal Interpretation
On the legal side, what is the interpretation of ERC policy of existing legal processes? This interpretation is highly subjective and contentious since there is no definite guideline, Atty. Inocencio stressed.
Mr. Laserna explained that Akelco’s mandate is to provide affordable, reliable and sustainable power services to all communities within its territorial jurisdiction. Although kwh sales are evidently increasing with about 50 million kwh per month, the operating surplus generated is plowed back into the capital expenditure program. This includes acquisition and installation of electric posts, transmission lines, and transformers. In addition, economically depressed communities like Libacao, and Madalag are served from surplus of productive ones like Kalibo and Boracay. In essence profit is therefore zero.
Under the proposed project development P134,930,366 will be appropriated for 2011, P204,363,808 for 2012, P119,847,223 for 2013 and P105,084,984 for 2014.
While the 29 centavos ERC charge is basic, the additional 23 centavos is yet to be negotiated and confirmed by member consumers. Unlike in previous ERC policy that charges are axiomatic. This present application undergoes a democratic process of prior consultation. If the majority of members does not approve the proposed extension of power line to a certain barangay, then it is simply dropped.
As to routine clearing or maintenance of power lines, removal of branches of trees and climbing vines are classified as capital expenditure. Laserna justified that physical clearing results to reduction of power losses and damages.
What appears to be a price difference or additional service charge is actually 11 centavos per kwh from our latest billing. It would even be less since ERC has cancelled the P9 million proposed Akelco building construction in Boracay, said Laserna.
It may seem plausible that only significant increase with approval and implementation of capital expenditure of Akelco is 11 centavos per kwh. This is misleading since the price of bunker oil fuel for diesel power plant is skyrocketing in the world market. Nobody knows the outcome of economic sanctions imposed by the UN against Iran over its nuclear program. War in the Middle East could disrupt two-thirds of the world’s supply of oil to nations like the Philippines.
Diesel powered plants may not operate when the scenario is either unavailability of bunker oil or service charge of coop is already oppressive, marked by frequent brownouts and blackouts.
We must learn from past mistakes. The oil crisis of 1972 is an egregious example of overdependence on imported oil, a non renewable and polluted resource. Green energy program must be relentlessly pursued and supported by all sectors. Resources like geothermal, solar, water and wind are available to be tapped.
Management Responsibility
The proposed capital investment has no guarantee that Aklan and part of Antique would receive better services. It is anticipated that since the coop is being supplied of electricity from the power grid (Leyte and Iloilo) it would simply pass on the blame to them in case of frequent service interruptions. Moreover, there is no stipulation that the multi-million pesos investment will be transparent and accountable to the consumer members. What is the sanction to the Akelco management if it cannot deliver goods as envisioned in the proposed capital expenditure? The usual alibi is that they have their own internal audit. It is common knowledge that membership general assembly is held once a year and financial statement is not properly discussed, the report taken as gospel truth. (All who talks are from Akelco, five minutes was usually allotted for open forum. Raffle usually takes about one hour.)
Management policies of Akelco sanctioned by ERC is irrational since consumer members are “coerced” to invest in capital expenditure and yet receives no return on investment. Such malevolent practice must be stopped. Moreover, members of Board of Directors (BOD) after being elected and sworn into office readily forget their moral responsibility to consult with their constituents on vital policies are needed to strengthen the utility firm. What use are the BOD members for being elected and paid huge perks and allowance?
Akelco is the only electricity service provider in Aklan and part of Northern Antique. This exclusively exerts powerful influence on its members because of the implication to economic, social and industrial development. Any increase by the power firm on its already onerous rate is bordering on consumer patience. Investors should think twice before engaging in business in an area with high operating cost especially power cost.
The latest SWS data show that 24 percent of Filipinos is jobless for the last three months up from 20.3 percent. Big irony is that Aklan has 14 out of 17 towns targeted to be covered by conditional cash transfer of DSWD.
The above discussions should be treated with utmost consideration and respect since consumer rights could be trampled in the name of progress. Indeed, capital expenditure must be highly meritorious and logical since present basic need of Aklanons is survival. /MP
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