SMC power unit sees lower tari

Published : Friday, July 22, 2011 00:00

Article Views : 282

Manila Times.net Written by : Euan Paulo C. Añonuevo

ELECTRICITY rates should go down significantly in three years’ time as a result of the power sector reforms made under the Electric Power Industry Reform Act (Epira) of 2001, according to an industry player. 

Alan Ortiz, San Miguel Global Power Holdings Corp. president and chief operating officer, said that power rates should decrease by as much as 25 percent by 2013.

”When you have open access and retail competition, historically, the rates go down by 25 percent. Within a couple of years from the completion, historically, in other parts of the world rates have come down by 25 percent. So it’s an important threshold we have to watch,” he said.

San Miguel Global is a unit of food and beverage giant San Miguel Corp., which diversified into power generation in the past few years.

Under the Epira, generation companies like San Miguel can directly sell their output to customers next year after government privatized bulk of National Power Corp.’s power plants in Luzon and the Visayas.

The mandate aims to spur efficiency and lower rates through competition among power generating companies.

Critics, however, have long scored the Epira for its failure to bring down the country’s electricity rates and prevent power disruptions after nearly a decade since its passage.

But Ortiz, at one time president of state-run Power Sector Assets and Liabilities Management Corp., said that with open access and retail competition now in place, power firms can participate in a competetive market that was once dominated by the government. Under the Epira, PSALM is tasked to sell Napocor’s generating plants and contracted output.

This would bode well for consumers especially in three years’ time when a number of new power plants are projected to come on stream.

”The rates should come down particularly when all these capacities become available in an open market and in retail competition. There will be a cutthroat competition to give consumers
the cheapest and most reliable scenario. It’s reasonable to expect that,” he said.

The catch, however, is the ability of the grid to accommodate the new plants as transmission line constraints could affect the affordability and availability of new capacities.

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