Groups draft proposals to cut power rates

Creation of central clearinghouse for utilities pushed
By: Abigail L. Ho
Philippine Daily Inquirer
8:34 pm | Friday, September 23rd, 2011


The business, academic and labor sectors have teamed up for the first time to submit to the government a proposal to reduce electricity rates and ensure stable power supply.
The Philippine Chamber of Commerce and Industry, the Philippine Exporters Confederation, the Trade Union Congress of the Philippines and the Foundation for Economic Freedom gave 10 recommendations to arrest escalating power rates and four key suggestions to ensure supply security.
In the area of rate reduction, the joint proposal stated that any pending rate increase petitions be deferred. Instead, industry stakeholders should do a “strip and build” analysis of current power costs “and make hard decisions on how to bring it to competitive levels.”
The groups said certain cost burdens should be eliminated, reassigned elsewhere or deferred.
The state-run Power Sector Assets and Liabilities Management Corp. should also defer the collection of the National Power Corp.’s stranded debts and consider other possible options for recovery, including tucking this into the national budget and spreading payment over five to six years.
The government should also strengthen the capability of the Energy Regulatory Commission by giving it fiscal autonomy as well as review the merits of the current performance-based, rate-making methodology.
The groups likewise called for the creation of a “government single power purchaser” that would act as a central clearinghouse from which distribution utilities would buy their power supply at a premium of 2 centavos a kilowatt-hour.
“This would be a new entity. Its presence would eliminate gaming in the industry and ensure competition,” said PCCI energy committee chair Jose Alejandro.
PCCI president Francis Chua added that this scheme would allow the government to ensure that prices were not dictated by investors to the detriment of consumers.
The government should also defer adding more burden to consumers through the feed-in tariff rates for renewable energy.
“The FIT will add to the cost of production and result in as much as P9 billion in additional burden to investors. We have to be more competitive,” said Ernest Leung, treasurer of the Foundation for Economic Freedom.