Published
February 26, 2017, 10:00 PM By Myrna M. Velasco
The government policymakers’
lens of scrutiny is now shifting into the alleged cross subsidization between
customer-segments that Manila Electric Company (Meralco) has been reportedly
engaging in, hence, its reluctance to go for a fully-unbundled retail
competition and open access.
Meralco initially
questioned before a Pasig regional trial court the enforcement of mandatory
RCOA and the disbandment of its local retail electricity supplier (L-RES)
business unit in the subsequent phase of the industry’s retail competition. The
recent restraining order of the Supreme Court, however, was from the petition
of other groups.
Energy Secretary
Alfonso G. Cusi indicated to media that allegations of cross-subsidization are
among those they have been seriously examining as they contemplate on modifying
the governing rules for the industry’s retail competition sphere.
“They’re saying that
there’s cross-subsidization that’s why there’s a need for separate RES for DUs
(distribution utilities), that there should be unbundling of cost for transparency,”
he indicated.
Cross subsidization is
the practice of charging higher prices to one group of consumers to subsidize
lower prices for another group – which many economists view happens in state of
monopolies in industries.
It has been emphasized
that with the local RES (L-RES) being used as a vehicle for the DUs, there
would still not be enough transparency and separation of business segments,
thus, concerns of cross-subsidization cannot be categorically stopped and fully
ascertained.
“I am not saying that
my frame of thinking is right but I am validating… we have those questions that
are not being answered,” Cusi stressed.
There have been
allegations that the country’s biggest power utility engaged in such during the
November-December, 2013 tight supply crisis relative to Malampaya’s shutdown –
that it had to offer low rates to its industrial end-users so it can compete in
the RCOA space, but dumped the hefty rate hikes to its captive residential
consumers, thus, the social upheaval that happened during that time.
Details are not also
fleshed out or separated on its power supply contracting – as to which
volume/capacity or supply contracts are allocated to its L-RES serving
industrial end-users; to the capacity off-take it has been underwriting for
residential subscribers.
On the proposed new
Department of Energy (DOE) Circular that intends to relax the RCOA Rules,
Energy Regulatory Commission (ERC) Chairman Jose Vicente B. Salazar said
“I eagerly look forward to an intensive and thorough discussion with them on
this soonest.”
For the meantime, he is
assuring customers in the contestable market “that amidst these recent
developments and whatever future developments there may be, their interests
will always be given prime attention and consideration by the Commission.”
As of press time, the
central registration body at the Wholesale Electricity Spot Market (WESM) has
indicated that 140 contestable customers already asked formally to have their
RCOA switching applications deferred.
No comments:
Post a Comment