Power rates to go down in three years, says San Miguel power exec

BUSINESS MIRROR

SUNDAY, 17 JULY 2011 19:26 PAUL ANTHONY A. ISLA / REPORTER

CONSUMERS can start hoping that the Electric Power Industry Reform Act’s (Epira) promise of having competitive power rates for the country will come soon, Alan Ortiz, president and chief operating officer of San Miguel Global Power Holdings Corp., told reporters in an interview.

Ortiz, the former president of the National Transmission Corp. (Transco) and who helped craft the Epira, said he believes that the latter’s promise to bring down power rates will be realized in two to three years time.

By 2013 according to Ortiz, power rates would go down by 25 percent because of competition among the power-industry stakeholders.

“It’s been 10 years since the enactment of Epira. When we wrote the law we took into account that it would take 10 years to complete all the requirements. And through open access and retail competition [OARC], historically, rates go down by 25 percent,” he said.

Within a couple of years from the implementation of OARC, Ortiz pointed out that power rates in other economies were reduced by 25 percent.

Under the Aquino administation, Ortiz noted there’s going to be new capacity coming in the second half of the Aquino Administration.

“I think one of the unspoken accomplishments of the energy sector under the Aquino administration is the fact that they have actually sounded the alarm for new capacity in the country,” he said.

In a year, Ortiz also pointed out the number of new players that have come in and committed to build new power-generating capacities.

“It takes three years to build, so by 2014 or 2015 with that new capacity and open access and retail competition in place, we can expect rates to go down,” he said.

Ortiz also pointed out the power grid’s ability to take on these new capacities.

“The grid has to be in place to be able to accommodate the new capacities to come in,” he said.

Ortiz said OARC would play a key role in bringing down rates.

“In three years’ time, the rates should come down, particularly when all these capacities become available in an open market and in retail competition,” he said.

Ortiz explained that the cutthroat competition among industry players would result in giving consumers the cheapest and most reliable scenario.

OARC is expected to introduce competition in the retail-supply segment of the electric power industry, which means that electricity end-users with an average monthly peak demand of 1 megawatt for the 12 months preceding December 26, 2011, will now have a choice from whom to procure their electricity service.