Power discounts for ecozone firms extended

Business World Online
Posted on January 26, 2012 11:28:28 PM


DISCOUNTED ELECTRICITY rates for economic zone locators have been extended upon approval by Malacañang, the head of the Philippine Economic Zone Authority (PEZA) said on Thursday.
Linemen of the Manila Electric Co. check electricity meters in this undated file photo. Discounted power rates are meant to give economic zone investors a breather amid high costs of other production inputs. -- AFP
“Discounted power rates were extended. The extension is for one year or until open access is implemented. It was approved by the President,” PEZA Director General Lilia B. de Lima in an interview at the sidelines of the1st JFC (Joint Foreign Chambers in the Philippines) Investor Conference at the Manila Marriott Hotel in Pasay City
Malacañang officials, however, were not responding to calls to confirm the development.
Discounted electricity rates for economic zone investors are the subject of an agreement between the Power Sector Assets and Liabilities Management Corp. (PSALM) and distribution utility Manila Electric Co. (Meralco).
The agreement was to expire on Dec. 25 last year, but was extended for a month until Jan. 25.
Under the previous agreement, such investors paid a generation rate of P3.46 per kilowatt-hour (kWh) to P3.52/kWh, depending on consumption.
In comparison, Meralco’s industrial consumers pay a generation rate of about P5.347/kWh.
The discount has been estimated to translate to a total of P1.78 billion in yearly savings for all locators.
Ms. de Lima earlier said the government was able to negotiate a P0.25/kWh discount in power rates compared to previous discount of more than P1/kWh.
PEZA and the Department of Trade and Industry earlier proposed that power rates for economic zone locators be subsidized by the government as part of an incentive package.
Sought for comment, Budget Secretary Florencio B. Abad said in a text message on Thursday, “I remember endorsing [the proposals] to the Office of the President.”
Details of the final discount scheme, however, were not immediately available.
The discounted rates will be available to ecozone locators until the start of an open access regime.
Locators have three months from start of open access implementation to integrate into the new system.
Open access -- a regime where, initially, consumers using at least 1 megawatts can choose their source of electricity among accredited utilities -- was supposed to be declared on Dec. 26 last year, but was deferred to allow distributors more time to adjust their systems.
The government now targets to implement it in August. “Open access will be implemented in August and we will do the needed policies before that,” Energy Secretary Jose Rene D. Almendras said at the sidelines of the same investor forum. “We need to make the Wholesale Electricity Spot Market independent before open access can be implemented so we have to do that slightly before August.”
He added that the feed-in tariff for renewable energy -- which guarantees set rates that are higher than prices of electricity from conventional fossil fuel sources in order to attract investors -- will also be implemented this year after a delay of more than two years.
The scheme has been opposed by consumer rights grous and even some investment promotion officials, who have cautioned that -- amid the lack of adequate generation capacity -- it could drive up already-high electricity prices at a time the country is trying to lure foreign investments.
“We are very close to a win-win solution,” Mr. Almendras claimed. -- E. N. J. David