PH power rates no longer the second highest in Asia

by Madelaine B. Miraflor October 1, 2016

http://www.mb.com.ph/ph-power-rates-no-longer-the-second-highest-in-asia/

The power rates in the Philippines, albeit still high, is no longer the second highest in Asia and this can go lower if the investment in new power generation in the country will increase.

International Energy Consultants (IEC) Managing Director John Morris said that from having the second highest power rate in Asia in 2012, next to Japan, the Philippines’ ranking already went down to fourth.

IEC is an Australia-based consulting firm specializing in Asian power markets

A study conducted by IEC showed that lower fuel costs, mainly coal, was a major contributor to the lower Luzon prices in 2016. This was backed by lower distribution charge, lower system loss, and the power utility’s sourcing strategy were also major contributors to the decline.

Due to these three factors alone, Morris said that Meralco customers were able to save around R30 billion in power costs.

“Electricity tariff in Luzon will further go down should the investment in new power generation be made to meet the rapid demand growth, and competition at retail level is promoted such that wholesale electricity cost reductions are fully passed on to consumers,” Morris told reporters on Friday.

According to the same study, the average tariff of Manila Electric Company, the country’s largest power distributor, including VAT has declined 28 percent since January 2012 versus an average decline of 19 percent across 44 countries covered by the survey.

In local currency terms, this translates to a 22 percent decrease in the power utility’s average tariff versus an average decline of one percent across all markets.

Morris, who led the study, said that electricity rates in Luzon and selected markets from the Indo-Pacific region and other parts of the world are now at closer parity than before.

Luzon’s average electricity tariff is only 11 percent above the survey’s average rate, which reflects an improvement from a similar survey done by IEC which showed that electricity rates in the island was 24 percent above the average rate of surveyed countries in that year.

“That is an excellent outcome for consumers,” Morris said. “Considering that the Luzon power market is unsubsidized and the majority of electricity is produced using imported fuel.”

Morris emphasized the role government subsidies continued to play to make power rates artificially low in markets like Thailand, Indonesia, Malaysia, Korea, and Taiwan. He estimated that subsidies in those countries amounted to almost US$50 billion in 2015 alone.