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Letters From ERC - Part 1

Whenever on vacation, my late father would often discuss with me why our place is not moving forward, he would argue about the leadership and our typhoon prone location, but I argued about the high cost of power, making us less competitive and attractive to investors. Out of curiosity I checked their monthly bills and found an item PPA (Purchased Power Adjustment).

Sensing that there was something wrong, I sent an email to ERC (Energy Regulatory Commission) asking why the inclusion of the item PPA when there was no IPP (Independent Power Producer) to speak of. I also asked about the power outages.

Here is the first part of their explanation, (dated 2001) ERC's Public Information Division.

We presume that the electric cooperatives not connected to the Luzon Grid or IPP’s which you mentioned in your letter source their power requirements from NPC-Small Power Utilities Group (SPUG). NPC-SPUG refers to the functional unit of NPC created to pursue Missionary electrification function.
This function involves the provision of basic electricity service on Unviable Areas with the ultimate aim of bringing the operations in those areas to viability levels.
Although these cooperatives obtain their power supply from NPC-SPUG, they are still allowed to charge and collect Purchased Power Adjustment (PPA). This is so because NPC is authorized to pass on Fuel and Purchased Power Cost Adjustment (FPCA), which consist of two components, namely: Fuel Cost Adjustment (FCA) and Purchased Power Cost Adjustment. Thus, for DUs not connected to the Grid, they are charged FCA only. NPC cannot pass on to its SPUG customers the Purchased Power Cost Adjustment (PPCA) because there is no IPP to speak of in the first place. Thus, the consumers of the subject cooperatives do not benefit from the pegging of PPCA at P0.40/kWh per directive of PGMA issued on May 8, 2002.
On top of FCA, the other components of PPA, which the electric cooperatives may pass on to their end-customers, include system loss, company used power and other adjustments. PPA is collected not simply because of excess power, but such excess power forms part of the minimum energy off-take (MEOT), which the parties have agreed to undertake, even if the same is not used, or partially used.
The power outage in your place may be systematic in origin. It may be due to some operational inefficiencies of the electric cooperative.
We would be glad if you could give us information on your exact location to enable us to address your concern on the power outage in your place.
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