WMPC, Zamcelco agree to end rotating brownouts in Zamboanga City

By Lenie Lectura – May 6, 2019
from Business Mirror

WESTERN Mindanao Power Corp. (WMPC) and Crowninvestments Holdings Inc., the investor-manager of the Zamboanga City Electric Cooperative (Zamcelco), signed last week a compromise agreement to put to an end to the rotating brownouts in the city.

Under the compromise, Crown will give a partial payment of P220 million to WMPC.  Upon payment, WMPC will run its plant for 60 days.

This compromise agreement is without prejudice to the respective claims of both parties before the Energy Regulatory Commission (ERC).

“We have been trying to settle with WMPC for three months now. We are glad that WMPC finally accepted this compromise. With this, we can stop rotational brownouts and stabilize electricity in the city,” Crown representative lawyer Jomar Castillo said.

The Alsons Power Group has been operating in Zamboanga City since 1997 through WMPC’s bunker C-fired diesel power plant in barangay Sangali.

“By signing the compromise agreement, we reaffirm our commitment to be Zamboanga’s partner for growth in the long term,” said Joseph C. Nocos, vice president for business development of WMPC and the Alsons Power Group.

This compromise, proposed by Zamboanga City Mayor Maria Isabelle Climaco-Salazar, is a temporary measure to address the power emergency at Zamboanga City while the legal dispute between the parties is still with the ERC.

Crown said it discovered through a financial audit in late January that WMPC overbilled the co-op in the amount of P441 million from 2015 to 2018. WMPC, already one of the most expensive power suppliers in Mindanao for its use of diesel, billed Zamcelco for capacity recovery fee, and operations and management without basis as its power-supply agreement (PSA) with the co-op was not yet in effect.

WMPC also billed the co-op for a contracted capacity of 50 megawatts, when Zamcelco nominated a daily average of 25 megawatts—50 percent less than the amount the cooperative paid for.

When Crown flagged this issue to WMPC, WMPC unilaterally cut its supply to the cooperative. Its withdrawal resulted in rotational brownouts and fluctuating electricity in the city.

Crown-Zamcelco filed a motion with the ERC for a claim for refund of the overpayments. The motion also prayed for its withdrawal from and the ERC’s dismissal of the application for approval of Zamcelco’s power-supply agreement with WMPC.

Asked why Crown is pursuing this legal matter, Castillo said, “As the new investor-manager, we are looking out for Zamboangueños after years of mismanagement of the city’s power co-op. Zamboangueños were made to pay more than what they should have. We want to return their money to them.”

The joint venture of Crown and Desco Inc. won the investor-management contract for Zamcelco with a P2.5-billion bid. This capital infusion allowed the cooperative to settle P1.2 billion of its outstanding debts, and invest in upgrades that allow the new Zamcelco to continuously work toward zero blackouts in Zamboanga City.

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