12/07/2010 (Business Mirror) - LOCAL coconut-oil producers are pushing for a review of the computation used by transmission companies for their transmission demand charge after some mills in Mindanao registered up to a 79-percent hike in their per-kilowatt-hour (kWh) rate from January to May.

Henry T. Lao, chairman of the Philippine Coconut Oil Producers Association (Pcopa), said the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) should look into the pricing mechanism of transmission companies since it is affecting the competitiveness of local coconut-oil millers versus the importers of palm oil.

He cited as an example the Iligan plant of Minola cooking-oil producer San Pablo Manufacturing, which posted an 80-percent increase in electricity bill in May compared with January. The electricity bill of San Pablo’s plant in Cagayan de Oro recorded a 37-percent increase during that period while the Davao plant saw a 26-percent rise.

“Reviewing the power bill of the plants, we observed that the biggest contributor to the increase in effective electricity cost per kilowatt-hour is the transmission demand charge. This ranges from 116 percent to 223 percent per kilowatt on demand basis, or 17 percent to 30 percent, if expressed as a per-kilowatt-hour energy-used basis,” said Lao in a statement.

He said the ERC and DOE should step in and review the computations of the transmission companies, particularly since it is not really clear how they are arriving at their charges.

Lao added that the transmission companies are using terms such as ancillary charges, the rates of which differ from one area to another.

“The government should review the transmission companies’ practice of using the peak of consumption as basis in multiplying the transmission charge because it is not helping the companies which are experiencing on and off manufacturing due to external factors like lack of raw materials,” he said.

“The disparity is so huge that we can no longer just ignore it. Something must be wrong somewhere with that big magnitude of a jump. And it is so alarming because it seems there is no standard basis of computation,” the Pcopa chief said.

Because of this, Lao said coconut-oil producers are at a “big disadvantage” since processed palm oil only costs P42 per kilo ex-plant, while refined coconut oil costs higher.

“It is a given that per hectare, plants manufacturing palm oil can produce more. But because of the high cost of power, the disparity is being aggravated. We are becoming more uncompetitive and if we lose the domestic market to imported palm oil, millions of Filipino coconut farmers will also be displaced,” he said.

He noted that power accounts for about 10 percent of the production cost of coconut-oil producers.

Jesus L. Arranza, president and chief executive officer of the CIIF-Oil Mills Group and chairman of the Federation of Philippine Industries, said he will bring this matter to the attention of Sen. Juan Ponce Enrile for the possibility of conducting a Senate inquiry.