The Exorbitant Power Rate of Casureco II, Whose Fault is It?

The whole issue of this exorbitant power rate being charged by Casureco II to its consumers was first brought to the attention of Cong. Gabby Bordado, Jr in early September of last year. Soon after he immediately called a dialogue with Casureco II officials to get to the bottom of this dilemma with the members of the tri-media in attendance held in a hotel in the City of Naga.

This preliminary dialogue produced no solid answer though as to why Casureco II has the highest rate among the four Electric Coops in the province. Except for Casureco II’s justification that the price of coal went over the roof because of the war between Russia and Ukraine, no other explanation was given. Coal is the main fuel used by Casureco II’s “contracted suppliers” to generate electricity and Ukraine is the number 2 producer of coal in the world. With a limited supply of coal available in the market caused by this unfortunate war, the supply and demand kicked in and the price of coal suddenly skyrocketed—very true, but that was not the primary reason why consumers of Casureco II has a high electric rate as divulged later by Energy Regulatory Commission (ERC).

What Casureco II officials also failed to answer during that same dialogue was the question raised by this writer as to why it did not start to offer the Competitive Selection Process (CSP), or in simple terms, the bidding process in a timely manner to get the most competitive price of electricity. Their concerted justification was that “it is not easy to prepare the CSP which other Electric Coops belied when queried with this nonsensical (and laughable) answer.

There are other Independent Power Producers (IPPs) at that time that do not require coal as their main fuel to generate electricity like geothermal, natural gas, hydro, solar, and wind energy. These IPPs could have been pooled together to satisfy Casureco II’s power requirement—but, it failed miserably to offer or open the bidding process as mentioned earlier to the detriment of its consumers even when its existing “contracted suppliers” with coal as the main fuel have expired contracts, one of which was way back in 2015 as disclosed subsequently by ERC.

And by the way, it was the committed effort and persuasive invitation of former VP Atty. Leni Lobredo that brought the ERC Chairperson, Ms. Mona Dimalanta and her technical team to the City of Naga to look for ways to lower Casureco II’s excessive power rate—at that time hovering over P17/kwh! In that March 23, 2023 forum held in a hotel in the City of Naga attended by Cong. Gabby Bordado, Mayor Nelson Legacion, Casureco II officials, LGUs, and the different sectors in the City—all invited by Atty Leni (who was not able to make it as her presence in Manila is indispensable), Ms. Mona promptly repudiated Casureco II’s equivocal claim that it has “approved extended contract clause” with AES Masinloc and SMEC, stating strongly that ERC never approved such claimed contracts. This rebuttal also entirely affirmed and substantiated this writer’s earlier assertion on the same issue and denunciation published in this column dated Sept 15, 2022.

Furthermore, Casureco II’s failure to offer CSP, or bidding, as exhibited openly in its own PowerPoint presentation in that same forum sponsored by Atty. Leni, speaks for itself—loudly! And for that reason, as vividly as it is, Casureco II apparently and willfully extended the expired contracts of its suppliers with a preposterous premium price, illegally—which resulted disastrously in the prevailing high power rate being charged to consumers.

On April 17, the office of Atty. Leni was in receipt of ERC’s official findings and decision citing among others; Casureco II’s continuous procurement of power from its suppliers whose supply contracts with Casureco II with very high prices have already long expired. Likewise, Electric Cooperatives, like Casureco II must follow the ERC’s authorized power procurement process, which must be done ONLY through the Competitive Selection Process (CSP) or through bidding to ensure an uninterrupted supply of electricity at a competitive cost. Unfortunately, Casureco II failed to do this for whatever reason.

Now, even for the sake of argument Casureco II’s “extended contract clause” interpretation claim is valid (which was ostensibly rejected by ERC), the simple question now is: why in heaven’s name Casureco II decided to continue to procure the exorbitant price of electricity these suppliers are selling and pass it on to the hapless and helpless consumers?

A retired Sr. Asst Prosecutor friend said, under “res ipsa loquitor” doctrine, all those connected with this Casureco II fiasco are liable for negligence.