National Grid’s plan to buy Panay power assets opposed

Business World Online
Posted on October 13, 2011 10:27:17 PM


ILOILO CITY -- The city government and Panay Electric Co., Inc. (PECo) are opposing the move of the National Grid Corporation of the Philippines (NGCP) to acquire the sub-transmission assets of Panay Energy Development Corp. (PEDC) for fear this will jack up electricity prices.
Randy S. Pastolero, PECo’s vice-president for operations, said NGCP’s plan to acquire Panay Energy assets will result in a P1 hike in electricity rates in Iloilo City.
“That’s unfair because we will now be subject to transmission costs charged by NGCP even if PEDC’s plant is within our franchise area. Even if we will pass on the charge to customers, we don’t want to burden consumers. We will certainly intervene in their application,” Mr. Pastolero said in a phone interview on Thursday.
PEDC, a subsidiary of Global Business Power Corp. (GBPC) of the Metrobank Group, operates a 164-megawatt coal-fired power plant in LaPaz, Iloilo City.
Iloilo City Mayor Jed Patrick E. Mabilog said in a separate phone interview that he has also directed his legal team to draft an opposition to NGCP’s application with the Energy Regulatory Commission (ERC) to approve its capital expenditure for the acquisition of PECo’s sub-transmission assets.
Mr. Mabilog said consumers in this city will further be burdened by transmission charges on top of the looming P3 increase in overall rates of PECo with the approval of its power purchase agreement with PEDC.
“Iloilo City consumers should not be paying transmission charges because the power plant is embedded in the city. It would be unfair if we lose our advantage and see our rates go up further. It’s a potential turnoff for investors,” Mr. Mabilog said.
Gil V. Altamira, GBPC’s commercial operations manager in Panay, clarified that the company’s sub-transmission assets are not for sale although it is willing to turn over to NGCP the transmission lines to Sta. Barbara town and a single breaker in its switchyard for maintenance purpose.
“The switchyard is a form of redundancy meant to protect the plant from fluctuations in the Visayas grid,” Mr. Altamira explained.
“We can give them (NGCP) the transmission lines, but not the entire asset because it will redound to [sic] increases in electricity rates.”
In its application to the ERC last Sept. 20, NGCP explained that this move was meant to maximize use of these assets while ensuring a level playing field among power generation companies. “The transmission facility must not be used by a generation company for a potentially unfair market advantage over its competitors. In the case of a generation company that serves other grid users through its facilities, this advantage over other generation companies cannot be overemphasized,” it said.
NGCP said it plans to spend nearly P620 million to acquire PEDC’s sub-transmission assets. -- Francis Allan L. Angelo