PCCI urges ERC to go slow on further power pricing changes

By Richmond S. Mercurio (The Philippine Star) | Updated October 26, 2015 - 12:00am

MANILA, Philippines - The Philippine Chamber of Commerce and Industry (PCCI) is asking the country’s energy regulator to focus on keeping prices of electricity stable and competitive instead of getting into unnecessary tasks in the power sector.

In letter sent to the Energy Regulatory Commission (ERC), the country’s largest business group said the Philippines’ electricity watchdog should not allow itself to be distracted by any propositions that are applicable to larger and more sophisticated economies.

In particular, the PCCI urged the ERC to exercise caution in making changes to the power industry’s rules of retail competition, warning that changes may trigger higher billings for small power consumers.

“In addressing the current power situation and the challenges we have today, any proposed solution should be, as the saying goes, simple, focused and sweet,” PCCI director for energy and power Jose Alejandro said.

The business organization said the Philippines’ total power demand to date is only 15,000 megawatts, with the country having the lowest per capita power consumption and the lowest per capita gross domestic product in the region.

Likewise, the PCCI said the country has seventh highest tariff or power cost in the world, therefore making it among those with the lowest annual foreign direct investment (FDI) in Southeast Asia.

 “We are, therefore, really a still developing economy. Any thought beyond that is a mirage,” Alejandro said.

“The ERC would be very well-advised if it focuses its capability and resources in addressing the more important challenge of how to achieve a sustainable power supply and competitive price,” he added.

The PCCI said a proposal allowing a distribution utility (DU) through their Retail Electricity Supplier (RES) to directly supply electricity to a large power consumer or contestable account (CA) outside its franchise coverage would create an unstable power distribution and demand projection and development.

The business group said utilities should be given ample opportunity and encouraged to keep the CAs in their area through good service and better price instead.

“Every DU must focus itself in improving and enhancing its system and services and inviting as many CAs in its area instead of going around peddling power and sniping at the CAs of another,” Alejandro said.

“Having too many RES in a small market of 15,000 MW peddling around in this small market demand is definitely going to bring up power cost,” he added.

The PCCI said the Competitive Selection Process (CSP) being proposed and discussed at present would be a good concept towards achieving true competition and transparency. 

The group, however, said the CSP should still be evaluated well considering the peculiar local landscape of transmission, distribution and generation. 

“The Department of Energy and the ERC should be well-advised to take its time to study how to optimize the concept,” the PCCI said.