Gatchalian urges Akelco not to burden consumers with pass-on charges during Boracay closure

Senator Sherwin Gatchalian urged the Aklan Electric Cooperative Inc. (Akelco) on Monday to invoke a force majeure so as not to pass on extra power charges to consumers during the six-month closure of Boracay island starting this week.

“Clearly, the complete closure of Boracay is an unforeseeable event completely beyond the control of AKELCO. This is definitely an instance when force majeure will apply,” Gatchalian, chairman of the Senate energy committee, said in a statement.

Shut down of restaurants, resorts, and other commercial establishments on Boracay Island during the time span of the closure order will not only result in loss of jobs but also drive down the demand for electricity in Akelco’s franchise area.

On April 20, the National Electrification Administration posted an article on its website saying electricity consumption in Boracay is expected to decrease by 84 percent and by 38 percent in relation to the overall load profile of the electric cooperative once the temporary shutdown of the island is in place.

It said Akelco is finding ways and doing what is necessary to ease the impact of the island resort’s closure on the utility’s power rates by seeking negotiation of existing bilateral contracts with Independent Power Producers (IPPs).

Engineer Alexis Regalado, Akelco general manager, was quoted as saying that they would propose to reduce the minimum energy off-take (MEOT) until the tourism business resumes in Boracay, have hourly reductions proportionate to all power suppliers, and implement monthly reconciliations to adjust the bilateral contract quantity of the electric cooperative.

If the IPPs would reject the proposal, then Akelco would have no choice but to implement a P1.5894 per kilowatt hour (kWh) increase in power rates during the period when the island is closed.

However, if the talks bear fruit, the rate adjustment will only be 0.0162 centavo per kWh.

“Worse to worst scenario, kapag walang negotiations sa IPP ng Akelco, ang rate increase would be—based from our simulation—P1.5894,” Regalado said.

The closure will also cost Akelco an average of P17.261 million in distribution, supply and metering (DSM) revenue losses based on data provided by the utility, according to the NEA.

Gatchalian said that would be an unconscionable burden to put on Visayan power consumers, who already have to suffer through high power rates during the summer.

He said to prevent the imposition of pass-on charges, AKELCO should invoke the force majeure provisions of its power supply agreements with the generation companies to temporarily suspend the procurement of unneeded electricity while Boracay is closed.

The forthcoming declaration of a state of calamity in Boracay would bolster AKELCO's case, the senator noted.

“The state of calamity declaration would also allow the LGUs and AKELCO access to calamity funds. These should be used to further mitigate the impact of the Boracay closure on electricity consumers in Aklan, Antique, and Capiz,” he said. —Amita Legaspi/VDS, GMA News