Analyst group: Power rates to remain volatile

Business Mirror

14 Jan 2014 

 

Written by Bianca Cuaresma

Limited power reserves in Luzon, which sparked the controversial proposed rate increases in the last weeks of 2013, would cause power rates to “remain volatile” in the future, an international economic analyst group said.

In a research note on the “Philippines’s Power Price Spike,” GlobalSource Partners issued a warning that electricity prices were still likely to move up and down in the months ahead if such power-supply issues were not addressed.

 “As demonstrated by events leading to the recent price spike, the risk of inadequate power, especially during periods of high demand and low capacity from hydro plants [summer months] or supply interruptions [caused by any and all misfortunes], seems quite high,” GlobalSource noted.

However, the research report did not cite the specific amount of movement in power prices or when the volatility in power prices is seen to persist.

The international analyst group also said that more analysts were now seeing the risks of rotating blackouts, reminiscent of the 8-hour long rotating power outages in Metro Manila in the early 1990s.

“That cost the economy dearly in terms of lost output and foregone investments. This may happen as early as this summer if peaking plants are not deployed due to the lack of fuel arising from a prolonged payment interruption,” the research report said.

“A pity if this actually happens,” it added.

But GlobalSource said that while these fluctuations of power rates would contribute to higher headline inflation in the near term, the overall impact would not be “too worrisome.”

According to the report, this because electricity, gas and other fuels account for only 7 percent of the total consumer price index (CPI) basket.    source