Power Companies Slam Napocor Rate Hike In December
Power rates are
expected to increase this December not only due to the value-added tax but
also the government’s approval of the National Power Corporation’s
application to increase power rates. At this point, even business leaders
and power companies have denounced the government’s failure to lower
prices of electricity.
BY JHONG DELA CRUZ
Bulatlat
In their opposition to the National
Power Corporation’s (Napocor) decision to increase power rates, consumer
rights groups now have an unlikely ally in the energy sector’s industry
players and other business leaders.
The Energy
Regulatory Commission (ERC) approved last December 6 the Napocor's
application to collect its deferred generation, fuel and foreign exchange
costs incurred between Oct. 2004 and March 2005.
The
increase is covered by the Generation Rate Adjustment Mechanism (GRAM) and
Incremental Currency Exchange Adjustment (ICERA), which will impose a
combined rate adjustment of about P0.1223 ($0.0023, based on an exchange
rate of P53.42 per US dollar) per kWh in Luzon, P0.0831 ($0.0016) in the
Visayas, and P0.0658 ($0.0012) in Mindanao. The amounts are half of what
Napocor applied in September this year.
Donald Dee, president of the Employers
Confederation of the Philippines (Ecop), lamented that the government
failed in lowering prices of electricity after the enactment of Electric
Power Industry Reform Act (Epira) in 2001. While his statement is short of
calling on the government to repeal the law, this nevertheless mirrors the
stand that an angered private sector takes when government policies do not
fulfill their own interest.
Political factor
The government has been bent on
privatizing 70 percent of Luzon and Visayas’ generation capacity since
2003. At present, only 11 percent of the two island group’s generation
capacity has sold by the Power Sector Assets and Liabilities Management
(PSALM) Corporation.
The reason, according to industry
players, is that investors are wary of the current political situation
given that the clamor for President Gloria Macapagal-Arroyo’s ouster has
not died down.
PSALM president Nieves Osorio said
that the government has been “ambitious” in targeting to sell all of the
Napocor’s remaining 31 generation companies (gencos) this year. To add to
the seven gencos privatized in 2004, PSALM is eyeing the sale of the
Bataan thermal plant this December and Masinloc plant which investor YNN
Pacific Consortium, Inc. has refused to pay the $223 million upfront fee
due to unresolved issues facing the government.
PSALM has postponed the complete sale
of the gencos for July 2006. At that time, the “open access” scheme will
be launched. As early as now, however, Philippine Electric Power Operators
Association Vice President Ramon Abaya said that the scheme is impossible
to implement.
Abaya said that due to what the
administration is going through politically, investors will not be
interested in the 32 remaining gencos.
Spot the difference
Abaya said that the government is
scheming as it rushes the distribution utilities to sign up for transition
supply contract (TSC).
TSCs will make distribution utilities
unable to tap their own independent power producers (IPPs) other than NPC-led
IPPs.
The Napocor threatened to close some
93 distribution utilities if they do not sign up for the TSC. Moreover,
the TSC signing is a take-off for the wholesale electricity spot market (WESM),
industry players claimed.
Psalm had difficulty in getting the
consent of its creditors like the Asian Development Bank (ADB) and the
World Bank (WB) for debt and asset transfer. After all, the TSC from
distribution utilities is necessary for the WESM and “open access” to
happen.
Engr. Ramon Ramirez of Samahang
Nagtataguyod ng Agham at Teknolohiya (Agham, a group of scientists and
technologists) said that the WESM is like a stock market where buyers of
electricity, including end-users, choose from distribution firms that
offer the lowest electricity prices.
The government claims this will
eradicate the monopoly in electricity industry and heighten competition
among retailers because those companies or consumers who use up one
megawatt of electricity can participate in the “open access” where
resellers are allowed to use the lines of those already existing
distribution utilities.
Ramirez said WESM will only succeed in
a market where true competition prevails. “Only a handful controls the
gencos and distribution utilities. When the WESM becomes operational,
consumer will ultimately suffer from unregulated prices of electricity.”
Sham discounts
“Lifeliners” are those who are
supposed to benefit from a P0.30 ($0.0056) discount when they consume
electricity below 100 kilowatt-hours (kwh) monthly.
According to EPIRA, those who consume
above the lifeline rate shoulder subsidize the lifeliners. “We used to
contribute P0.0761 ($0.0014) until ERC increased it to P0.1049 ($0.0019)
last month. Now we contribute P0.1082 ($0.0020) to the lifeliners,” said
Ramirez.
“Unlike the jeepney drivers who absorb
the P1.50 ($0.0281) discount in transportation fare for students and
senior citizens, Meralco or the government does not absorb the discount
but collects from the consumers using more than 100 kwh to recover the
loss,” he said.
The government and big companies make
it appear that they are the ones giving the discount and absorbing the
loss. Meralco has been reported to be losing some P1.5 million
($28,079.37) in recovery for the lifeline subsidy.
Thus, from December 2004 to November
2005 the residential consumers had an increase of P0.4991 ($0.0093) per
kwh in their power bill, added Ramirez.
“Compared to previous month, our
November 2005 effective power rates increased by P0.22 ($0.0041). It is
now P7.82 ($0.1464) compared to P7.60 ($0.1423) for those in the 101
to 200 kwh consumer class category. It is higher for the upper consumption
categories of 201-300, 301-400 and 401 and above kwh.”
More increases
Ramirez warned that more increases are
in store for us, noting that both Meralco and Napocor have pending
petitions for power rates hikes.
The remaining interclass discount of
P0.2139 ($0.0040) will be removed, as it only can last three years from
the implementation of EPIRA. Worse, the reformed value added tax imposed
last November will be reflected in the December 2005 billing.
Meralco will increase its electricity
rates by P0.73 ($0.0137), from P3.50 ($0.0655) to P4.57 ($0.0855).
Abaya stressed that the EPIRA law does
not state that lower electricity prices will take place.
For his part, Ramirez said that the
victories of the people over manipulations of big distribution utilities
may be few but significant.
In 2003, Meralco’s over four million
consumers won the overcharging case against the firm when the Supreme
Court ruled in favor of petitioners. The firm according to the decision
committed some 28 billion in surcharge and ordered it to return to the
consumers.
On the unbundling case filed by
peoples’ organizations led by the Bagong Alyansang Makabayan (Bayan, or
New Patriotic Alliance), the Court of Appeals ruled that Meralco’s
unbundling scheme, earlier approved by the Energy Regulatory Commission,
be forfeited. The court also noted the ERC’s abuse of discretion.
Ramirez said, “If the distribution
utilities will be converted into cooperatives belonging to the people,
then the gains can be distributed in dividends. This can become additional
income for poor families or be discounted to lower power charges” he said.
“This is more realistic compared to the government’s illusion for lower
electricity prices under the EPIRA or by easing to level the playing field
for industry players dominated by giant corporations through the law.”
Bulatlat
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