EDITORIAL - Looming crisis

(The Philippine Star) | Updated February 6, 2014 - 12:00am

Once again, power distributor Manila Electric Co. has warned of blackouts if the Supreme Court order restraining a hefty power rate increase is not lifted soon. The nation, Meralco has warned, is just postponing the pain. The government, for its part, is opposing the lifting of the TRO and has reassured the public that the rate freeze would not lead to blackouts.

The government will have to do more than skirmish with the country’s largest power distributor to address the power supply uncertainty, which has bedeviled the nation since the first Arroyo administration. The national leadership should also consult the private sector on whether operating public utilities should be governed by the same market rules for other private enterprises.

Electricity is a basic necessity in modern life, not only for households but also to run the engines of economic growth. Currently, that basic necessity costs more in the Philippines than in any other Asian country. This is one of the biggest reasons for the weakness of Philippine manufacturing, which ideally drives growth and creates the decent jobs that make growth inclusive.

Electricity in this country is not only the most expensive in the region but also inadequate, with little generating capacity added since the acute power crisis from 1991 to 1992. That crisis crippled Metro Manila and other parts of Luzon, driving away investors to neighboring countries, some of whom never brought their money back to the Philippines.

This time it’s Mindanao that continues to suffer from daily rotating blackouts, with Metro Manila being warned of power outages if the Supreme Court TRO is prolonged. An inquiry is still underway on whether the proposed hefty power rate hike, which will add several thousand pesos to the monthly power bill of an average middle-income household, was caused by regulatory failure, unrestrained profit motive, collusion among industry players, or a confluence of all those factors.

What’s clear is that there is no solution in sight in the near future for energy insecurity. It will take a few years to build new power plants, and there is no certainty that there are investors willing to go into this business. If politicians want to avoid the backlash of soaring power rates, the government can review all the taxes and fees tacked on to the monthly electricity bill, all of which are passed on to consumers. The executive and Congress must confront this problem decisively, together with industry players. Otherwise the nation may wake up one day soon to a full-blown power crisis.   source