Casureco II Dilemma; Can It Afford the Refund?

The Energy Regulatory Commission (ERC) in its order dated 17 April 2023 compelled Casureco II to refund its consumers of the overcharged power rates—a big portion of which is traced back all the way to 2015.

But, before we even talk about the refund, let’s first sequentially retrace the steps that led to the subsequent skyrocketing of the power rate:

a) Sometime in September 2010, Casureco II Board of Directors entered into a Power Supply Agreement (PSA) with Masinloc Power Partners, Company Limited (MPPCL)—(for purposes of easy appreciation, this writer will just use the term “Masinloc”). This PSA was submitted for approval to the ERC on 7 October 2010 under Case Number 2010-121RC titled Contract for the Supply of Electric Energy (CSEE) with an expiration date of 26 May 2015.

b) This CSEE application was granted a provisional authority to implement on 15 November 2010.

c) On 21 October 2011, Casureco II filed an extension to the ERC of this provisional authority seeking indefinite authority, among others, and to allow Masinloc to continue to supply electricity.

d) On 14 November 2011, ERC extended Casureco II ‘s provisional authority, which was originally granted to it on 15 November 2010, until revoked or made permanent.

e) On 20 February 2013, Casureco II filed amendments and contract energy to the ERC for the CSEE extension of PSA with Masinloc (ERC Claimed this has no approval).

f) On 5 March 2018, Casureco II and Masinloc filed another manifestation to the ERC for an extension of CSEE and to allow Masinloc to continue to supply electricity (ERC claimed it never issued approval of this extension)

ERC in its 17 April 2023 order also referenced the 11 April 2015 DOE Department Circular No. DC2015-60-008 entitled “Mandating All Distribution Utilities to Undergo Competitive Selection Process (CSP) in securing Power Supply Agreement (PSA)…”—this was affirmed by the Supreme Court effective 30 June 2015 which detailed that “extension of PSA beyond 30 June 2015 can no longer be given effect”.

Now, even if Casureco II claims in its defense that it has CSEE extension approval on the “amendments and contract energy” of its PSA with Masinloc (which ERC claimed otherwise) the same is automatically considered invalidated beyond 30 June 2015 as per Supreme Court affirmation of the above DOE Circular. It simply means that from 1 July 2015 henceforth, the contract between Casureco II and Masinloc ceased to exist, pronto!

In addition, since the original CSEE of Masinloc expired on 26 May 2015, and ERC reported that it has never approved any extension thereafter, all power purchases, therefore, from then on is considered illegally contracted.

The astonishing question is why would Casureco II, even after the issuance of the said 11 April 2015 DOE Department Circular, file another extension of CSEE of Masinloc on 5 March 2018 and continuously and faithfully purchase its power from it when the legally binding Circular is explicitly clear that it is no longer allowed?

What Casureco II should have done upon receipt of the same Circular was to offer or start judiciously in a timely manner the bidding process, or the CSP, and act in accordance with the DOE directive—as all Electric Cooperatives in the country have conscientiously followed.

But to some extent, Casureco II unreasonably and unceremoniously extended its PSA with Masinloc for whatever reason, which has raised many eyebrows today.

And, why would Casureco II cling tightly like a leech to power supplier Masinloc since 2011 when its first contract expired and repeatedly extended its PSA until April of this year? There were other suppliers then with competitive and affordable prices than the over-priced power supplied by Masinloc, but Casureco II missed (?) the chance to seize this opportunity to get the best price when they failed to offer bidding is indeed inordinately suspicious? There’s a saying that “where there’s smoke, there’s fire”—nonetheless, this metaphorical statement is better left to the perception of readers.

Electric consumers of Casureco II are now demanding a refund. This may surely amount to Hundreds of Millions of Pesos considering that the computation of the illegal charges started eight (8) years ago—to be exact, 11 April 2015 as indicated in the ERC Order.

But, where will Casureco II get that enormous amount of money?

They intently reasoned out that if they are forced to pay the refund, they might not be able to pay their power suppliers, and this, in turn, may result in brownouts. This can be true, however, the unanswered question perhaps is where did the overcharged money go for the past eight years?

The power rate is computed on the total Kwh demand of Casureco II. All components of it are budgeted or assigned with kwh multiplied by the cost of supplied power. Since the power demand of Casureco II increased threefold for the past several years and the allocated amount on the other components (except generation and transmission as they are pass-on costs) remain unchanged or with minimal increase through the years, additional income through these extra kwh without allocation, therefore, is collected when the power rate is not regulated in a timely basis.

Considering that Casureco II is a non-profit entity being a “cooperative”, it operates under the hypothesis that its income derived from the operation is given back to its member-consumers in the form of rebates—which never materialized in the history of its existence. The worst that could happen is when Casureco II, because it could not raise the amount for the refund money, suddenly increases its power rate to pay for it, then it becomes a hi-way robbery if not a comedy of error; “linoto kita sa sadiring asin”.

There was a modest reduction of power rate last month from a little over P17/kwh two-three months ago to about P15kwh today. Casureco II is trumpeting this reduction, although it is still the highest in the province. A small consolation compared to the damages inflicted on the already financially challenged families and small businesses when its rate skyrocketed.

Who will stand up for them, for us who lost a lot of money because of their gross negligence??

Is sorry enough?