Business Mirror
MONDAY, 02 APRIL 2012 02:43
IF potential candidates in next year’s midterm elections are looking for an advocacy that would endear them to the masses, the ever-shrinking middle class and the business sector, they should look no farther than bringing down the crippling cost of electricity in the country.
Senate President Juan Ponce Enrile rode the issue of high electricity prices all the way to a fresh term in the Senate in 2004 and again in 2010. His Kontra PPA (Power Purchase Adjustments of the Manila Electric Co.) campaign advertisements made his name a byword among voters.
Candidates running in the 2013 polls should take a page off the campaign tactics of Enrile, but should take it a step farther and actually live up to the rhetoric by bringing down electricity rates to more affordable levels.
The Philippines already has the most expensive electricity in the whole of Asia. Indeed, we have among the highest residential and industrial rates of electricity in the world today. And the rate increases are still rising.
Another hike in Meralco bills is due in May apart from the P0.6904 per kilowatt-hour (kWh) adjustment in the generation rate of the National Power Corp. (Napocor) also due in the same month.
In May, Manila-based customers of Meralco consuming an average of 200 kWh could expect an increase of P8.30 in their bills, as the power distributor has been allowed to impose a tax-recovery adjustment charge (TRAC) to recoup its local franchise-tax payments from 1994 to 2004. The TRAC varies from one city to another.
For instance, a household in Manila consuming 200 kWh a month could expect its power bill to rise by P63.54 due to the TRAC and the diluted adjustment in Napocor’s generation rate via the Generation Rate Adjustment Mechanism (GRAM) and the Incremental Currency Exchange Rate Adjustment (Icera).
We believe access to safe, reliable and most of all, affordable, electricity should be regarded as a right, and the government should do something to help fully enforce this right.
The government’s attempt to restructure the electric service industry through the Electric Power Industry Reform Act (Epira) of 2002 has been a failed experiment.
Epira started the deregulation of the power industry and the privatization of state-owned generation and transmission assets. Power plants and independent power producer contracts under Napocor, and the transmission assets under the National Transmission Corp. were transferred to the Power Sector Assets and Liabilities Management Corp. The Wholesale Electricity Spot Market was also established to achieve greater transparency in the production and retail selling of electricity.
Unfortunately, Epira has not produced affordable electricity rates for the vast majority of power consumers.
Now more than ever, consumers are in dire need of relief. Spending on electricity is one of the highest, if not the highest, as a share of total consumer spending.
The prohibitive cost of electricity in the country is one of the biggest reasons we cannot attract as much foreign investments as we would like to in the country.
Household consumers have just as much to complain about as they are shouldering the biggest burden of the high electric rates, more than commercial establishments.
What was power deregulation for if it could not reduce electricity prices?
Privatization should have made the electric power sector more efficient but the only thing it accomplished was taking away the state subsidy on power rates. The Philippines is perhaps the only country where consumers are made to shoulder all the power costs, from generation to distribution, with no state subsidy.
We now have a power sector where regulatory oversight has been severely weakened; where generation charges and transmission costs are collected from us with minimum scrutiny or intervention. We are automatically slapped various charges and taxes in our electric bills without us having any say about it. We practically guarantee the windfall profits of power generators and distributors because we pay for all their expenses and losses without us having any stake in their companies.
Even the Malampaya gas fields in offshore Palawan, which supply three of the biggest power plants in Luzon and are estimated to power around 3,000 megawatts of electricity, have not contributed to the lowering of electricity rates.
The price of electricity in the country is as high as ever and it only promises to go higher in the near future, if the government can’t get its act together.
Deregulation, competition and open access—the promises of Epira evangelists—should translate to a competitive, efficient and lower-priced energy delivery.
Ten years after the law was passed, we are still waiting for the government to make good on these promises.
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