14/07/2025
Negros Power’s RFSC Charge Questioned
By Butch Bacaoco
CANE POINTS
In a press statement last Friday (July 11) at the FB page of Bacolod City Councilor Wilson “Jun” Gamboa, Jr., it was reported that the Bacolod City Council approved last July 9 a resolution he authored asking Negros Power to explain within 10 days “why it continued to collect the Reinvestment Fund for Sustainable Capital Expenditures (RFSC) shown in the monthly billings of power consumers.”
“The RFSC, created under Energy Regulatory Commission (ERC) Resolution number 20 series of 2009, allows electric cooperatives’ (ECs) to collect capital contributions from their members-consumers to amortize or pay-off debts associated with the expansion, rehabilitation or upgrading of the existing electric power system in accordance with the ERC approved capital expenditure (CAPEX) plan,” the statement explained.
“Negros Power is not an EC but a private stock corporation registered under the Securities and Exchange Commission (SEC) and, therefore, the inclusion of the RFSC charge of Php 0.1518 per kilowatt-hour (kWh) raised legal and ethical question,” the resolution reportedly postulated.
Roel Castro, Negros Power President and CEO, replied:
“We received the official copy of the resolution. Negros Power will address the issues raised by Councilor Gamboa at the right and appropriate time. But for the comfort of the consumers and the public, Negros Power’s rates are in accordance with the Certificate of Public Convenience and Necessity (CPCN) granted by the Energy Regulatory Commission (ERC) and all regulatory rules and laws.“
According to Gamboa’s statement, the resolution pointed out that “the RFSC in the consumers’ monthly billings is an item authorized only for ECs under ERC Resolution # 20, not with Negros Power which is a private stock corporation”.
“The collection of the RFSC without a corresponding regulatory provision could unduly burden consumers,” Gamboa was quoted as saying.
“Gamboa added that he crafted a resolution in response to said outcries over the oppressive inflation hounding the majority Bacolodnons worsened by the rising electricity cost and, likewise, in support of concerns that the privatized power sector lacks public consultation,” the statement further said.
Gamboa is the lone opposition candidate who prevailed and prevented the total domination of Bacolod’s politics by the Albee Benitez-Greg Gasataya juggernaut last May elections. That’s no small feat!
He has served for four terms (12 years) as councilor, but fell short on his vice-mayor run in 2022. During his term, he has consistently projected himself as a champion of consumer welfare, particularly in the power and water sectors. His popularity from his pro-consumer stance undoubtedly played a key role last May in propelling him to a remarkable win, and probably another three-term run, as city councilor.
Owing to his credibility on consumer issues, his eloquence and persuasiveness, the City Council looked beyond party lines and readily approved the resolution he authored questioning Negros Power’s continued collection of the RFSC.
The RFSC is nothing new. The EPIRA Law, passed on June 8, 2001, mandated the unbundling of power rates. Pre-EPIRA, the power bill contained only two items – the Power Cost and the Purchased Power Adjustment. After EPIRA, the bill was itemized into Generation, Transmission and Distribution, Supply & Metering (DSM) Charges.
The DSM Charges consist of Operations and Maintenance Expenses (OPEX), Payroll and Other Revenue Item (ORI), CAPEX (or Reinvestment Fund) and Debt Service.
On September 23, 2009, ERC issued Resolution No. 20-09, entitled "A Resolution Adopting the Rules for Setting the Electric Cooperatives' Wheeling Rates (RSEC-WR). The Gamboa-authored resolution credited this resolution as having “created” the RFSC.
This is not true. There was no animal called RFSC prior to July 6, 2011, but there has been a reinvestment charge since EPIRA’s passage in 2001.
ERC Res. No. 20-09 did not “create” the RFSC. The resolution simply introduced the “Members' Contribution for Capital Expenditure (MCC)” fund to replace the Reinvestment Fund and Debt Service components of the DSM Charges under the EPIRA tariff regime.
“The intent of the RSEC-WR in translating Reinvestment Fund into MCC is to recognize the fact that said MCC Charge indeed represents contributions from the member-consumers for the expansion, rehabilitation and upgrading of the ECs' distribution system which should be reflected in their bills for greater transparency,” the ERC stated.
It was only on July 6, 2011 that the ERC, by virtue of ERC Res. No. 14-11, renamed the MCC as the RFSC.
And contrary to what Gamboa claimed, there has been no “rising electricity cost” from Negros Power; Negros Power’s rates have been consistently lower than the rates of most ECs in Negros, Panay and Guimaras Islands.
The EPIRA mandated the privatization of the power industry. Though privatized, the power industry is a heavily regulated industry. Nothing can happen without the ERC’s express approval. Before the ERC issues any directive affecting rates, the ERC diligently conducts public hearings. Gamboa’s concern that “the privatized power sector lacks public consultation” has no basis.
Since Negros Power assumed responsibility over Ceneco operations on August 1, 2024, the private utility embarked on a massive more than P2 billion Five-Year Rehabilitation and Modernization Plan, the effects of which are now being felt gradually by consumers, in terms of fewer and shorter power interruptions.
If Negros Power took pains to prepare and implement a more than P2 billion five-year power systems improvement plan, perhaps it has also conducted same due diligence in other areas of its operation, particularly the financial aspect, no?●