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AKELCO must avoid pass-on charges during Boracay closure

BORACAY ISLAND, AKLAN, Philippines – Tourists take a late night stroll by the white sand beach of Boracay, July 2012 file image. The “world’s best island destination” consumes as much as 28 MW of power and is expected to drop to a mere 4 MW during the closure period. Photo by Mark Cayabyab/OS WIN GATCHALIAN

Senator Win Gatchalian on Monday urged the Aklan Electric Cooperative, Inc. (AKELCO) to invoke force majeure to avoid passing on extra power charges to its consumers during the impending six-month closure of Boracay Island.

“The closure of restaurants, resorts, and other commercial establishments on Boracay Island during the effectivity of the closure order will not only result in the loss of jobs. It will also drive down the demand for electricity in AKELCO’s franchise area, as these commercial establishments account for 41% of the electric coop’s power demand,” said Gatchalian, the chairman of the Senate Committee on Energy.

The senator estimates that from a high of 28 MW, Boracay’s energy demand will drop to a mere 4 MW during the closure period, leaving a huge surplus of unconsumed electricity contracted by AKELCO through long-term power supply agreements (PSAs) with various generation companies.

If business goes on as usual, the rest of AKELCO’s customers throughout Aklan, Antique, and Capiz will have to pay an additional P1.58 per kilowatt hour in pass-on charges to compensate generation companies for the electricity that is not consumed on Boracay Island. This will result in a total of P178 million in additional charges to be shouldered by consumers over the next six months.

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

To prevent the imposition of pass-on charges, the senator is calling on AKELCO to invoke the force majeure provisions of its PSAs with the generation companies to temporarily suspend the procurement of unneeded electricity during the Boracay closure period.

“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,” the senator said, noting that the forthcoming declaration of a state of calamity in Boracay would bolster AKELCO’s case.

“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 added.