Manila Bulletin
By MYRNA M. VELASCO
August 6, 2012, 5:49pm
MANILA, Philippines — Like all other players in the power industry, distribution utility giant Manila Electric Company (Meralco) is similarly gearing up for the anticipated kick-off of open access this year although it is just allotting a marginal pie of its supply for prospective contestable customers.
The introductory allotment of the company for open access had been placed at 10 megawatts and this will be coming from a portion of the capacity it has contracted with San Miguel Energy Corporation’s (SMEC) Sual plant.
Meralco Chairman Manuel V. Pangilinan confirmed that they are aligning “MPower” as a branding thrust for open access; and it is also the company’s enlisted retail electricity supply business.
The executives of the power utility firm qualified though that while they are starting small, the “initial contract capacity shall be increased or adjusted one month prior to OARC (open access and retail competition.” Meralco’s power supply agreement with SMEC is for seven years and to be extended upon mutual agreement by the parties.
The much-awaited market incursion of open access in the restructured power industry ushers in a policy regime in which cutthroat competition may finally drive down electricity prices for consumers. It will start with contestable customers or those which would be allowed to choose their power suppliers according to the regulator-prescribed consumption thresholds.
Nevertheless, the overarching goal of “bringing down electricity prices for consumers” has been the worrisome part for industry stakeholders because the “tight supply conditions in the power system” may frustrate such expectation.
Pangilinan has cautioned that the industry might need to “get out first from that electricity price spiral,” wherein billed costs to consumers tend to go up because of tight supply or ‘no-reserve margin’ conditions. At the very least, he reckoned that “you have to make sure you have enough capacity to cover short- to long-term supply.”
The Meralco chairman added that “you have to look first at the market. And what is the market? Supply exceeds demand, but if your supply is not enough to meet your demand, what will you be selling?” thus stressing that “from a customer standpoint, you also have to look at the shortage of supply. It’s a function of supply and demand.”
Meralco president Oscar S. Reyes has pointed out that “the goal of open access is to drive prices down, but our view is that, it will not happen if the supply is very tight to cover demand. If demand equals supply, or demand is more than supply, the tendency will be for prices to go up.”
The utility firm also indicated that the rules must first be set; and that policymakers may already be running out of time to carefully sort out or fully explain the mechanics of open access to prospective customers prior to the targeted December 26 commencement date.
Reyes said their main concern now “will be to serve our captive customers” or those which would not be bequeathed yet the ‘power of choice’ in the initial foray of open access, mainly the residential end-users. source
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