Power rates set to soar
By Donnabelle Gatdula (The Philippine Star) Updated February 17, 2010 12:00 AM
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MANILA, Philippines - Power rates are expected to soar as the impact of averting blackouts and the rate
adjustment mechanisms of the National Power Corp. (Napocor) are reflected in electric bills, the
government said yesterday.
Francis Saturnino Juan, Energy Regulatory Commission (ERC) executive director, said the impact of running
the diesel-fired power plants at the height of the blackouts will be reflected in electric bills next month.
This developed as the Commission on Audit (COA) said Manila Electric Co. (Meralco)’s unbundled rate
petition showed a number of items amounting to about P7.2 billion should have been excluded from the
computation.
Based on the result of the COA audit, the items that should have been excluded were certain pieces of
property and equipment amounting to P3.7 billion and P3.5 billion for calendar years 2004 and 2007,
respectively.
Juan said increases in the generation costs of the distribution utilities must be expected, “and for this
reason, the generation charge that will be imposed on end-consumers will be higher.”
Juan did not reveal the impact on rates of running Malaya and Limay power plants.
Limay, operated by San Miguel Energy Corp., was used to avert the supply shortage in the system when
several power plants shut down due to maintenance and technical problems earlier this year, he added.
Juan said Limay has yet to apply for compensation with the ERC for operating as a must-run plant.
Napocor has also filed several cost recovery applications under the generation rate adjustment mechanism
(GRAM) and incremental currency exchange rate adjustment (ICERA), he added.
Juan said if approved, the Luzon rate will increase by P3.38 per kilowatt-hour; P4.71 per kWh in Visayas and
15.55 centavos per kWh in Mindanao.
The ERC is set to approve the rate adjustments of Napocor, he added.
Meanwhile, Energy Secretary Angelo Reyes has assured the public of ample supply of electricity till June this
year.
“We now assure the public in Luzon about uninterrupted power up to June of this year,” he said.
“This has been brought about by the fact that the Limay (plant) will be on stream and will be generating the
power.”
Reyes said San Miguel Energy Corp. has started to run the Limay diesel plant as of Tuesday to give the
Luzon grid enough breathing space.
As of yesterday, the available capacity in the Luzon grid without the 540-megawatt Limay was pegged at
7,100 megawatts and the projected peak demand was 6,600 megawatts, he added.
However, they have to look for a solution to the Mindanao power situation, Reyes said.
Nograles okays hearing on blackouts
Speaker Prospero Nograles gave the green light yesterday for the House of Representatives to hold
hearings on rotating blackouts and investigate a possible failure of elections.
“Even during recess the Speaker shall authorize these committees to function as soon as possible and ask
the proper questions both in aid of legislation and oversight powers of Congress,” he said.
The House committee on energy should call a meeting regarding possible blackouts in the country, he
added.
Nograles said the committee on energy of Pampanga Rep. Juan Miguel Arroyo, oversight committee of
Quezon Rep. Danilo Suarez and the committee on suffrage of Makati Rep. Teodoro Locsin Jr. can hold
hearings even during the four-month campaign break of Congress.
“Our House committee on oversight and suffrage must also call House hearing so the public can be briefed
on auto electronic voting, especially information drive and machine delivery glitches and fears of candidates
about possibility of failure,” he said.
“I call upon third-term congressmen and those who are running virtually without opposition in their districts
to activate and attend these hearings.”
In a text message, Nograles expressed apprehension over the ability of the Commission on Elections
(Comelec) to conduct automated elections on May 10.
“I have some fears because Comelec has not reported to the leadership of Congress regarding the status
of automation which Congress approved (for) P11 billion,” he said.
“The Comelec must assure this nation that there won’t be a failure of elections. It’s their mandate to do so.”
However, Nograles is confident in the capability of Chairman Jose Melo to lead the Comelec.
“In fairness to Melo, his reputation precedes him,” he said. “I don’t think he will tarnish his reputation. I know
he’s a good man.”
Nueva Ecija Rep. Edno Joson has warned the public that a failure of elections means a holdover or
extended stay in power for President Arroyo.
On the other hand, Rep. Arroyo, House committee on energy chairman, said a clearance from the Speaker is
necessary to hold hearings during the recess to allay fears that the administration is out to sabotage the May
10 presidential elections.
“We are not taking chances,” he said.
“The May 10 automated polls is a historic first in the country, and we have to ensure that no power outages
would occur that day thereby ensuring that the results of our first automated polls will be as credible as ever.”
Locsin remains optimistic about the capability of the Comelec to conduct automated polls.
“Elections will not fail,” he said.
“The poll automation law was very brilliant because it provides also for the manual counting in case a
problem happens.”
Deputy Speaker for Women Ma. Amelita Villarosa also ruled out the possibility of a failure of elections.
“Not true, there will be no failure of elections,” she said, adding, “Our Constitution has provisions on who will
take over in cases like this.”
Binay: Blackouts could raise electricity rates
Makati Mayor Jejomar Binay warned yesterday that consumers might pay higher electricity rates due to the
blackouts.
The running mate of former President Joseph Estrada said the public must not expect blackouts to lower
their electric bills.
“In short, blackouts could become more expensive,” he said.
“The irony is that consumers might be paying more for guaranteed darkness.”
Binay said demand for power in the deregulated energy market might raise electricity rates.
If demand for power exceeds supply, power players are expected to bid and sell high, he added.
Binay said industry insiders have long warned that market forces would place a premium on whatever power
is available.
“The Manila Electric Co., the country’s largest power distributor, has increased electricity rates due to the
higher prices it pays to the National Power Corp. and independent power producers,” he said.
Binay said Meralco recently warned its consumers to brace for higher rates after its suppliers’ rates
triggered a steep P1 per kilowatt-hour jump in the generation charge to P4.9303 per kWh in February from
only P3.9175 per kWh in January.
Historically, wholesale electricity spot market rates go up at the onset of the dry season as consumption
rises and water levels in hydroelectric dams are reduced, he added.
Binay said he was not buying the assurance of Department of Energy officials that competition in the
electricity spot market would bring electricity prices down.
“In a glut, yes,” he said. “But when supply is short, there will be a bidding war for what is available. That is
how the market will behave.”
Binay said to prevent arbitrary increases in power rates, the ERC should not “rubber stamp” the pass-on
increase to consumers.
“Every petition for a rate hike must be properly studied,” he said.
“The DOE should exercise its powers in preventing power hoarding by producers who will do it out of fear
that they will be selling at a loss, or that they will not be paid, or that they will not be getting the optimum price
for their generation.”
Enrile suspicious of delay of law to lower electricity cost
In Legazpi City, Senate President Juan Ponce Enrile said “powerful interest groups” might have a hand in
the delay in the passage of a law to bring down the cost of electricity at the House of Representatives.
Speaking over radio, Enrile said the House has failed to act on the pending legislation which he has been
fighting for on behaf of consumers.
Enrile has filed Senate Bill 3147, the Uniform Franchise Tax Bill and Senate Bill 3148, the Electricity Rate
Reduction Bill to give immediate relief to power consumers.
The bills also seek to amend the Electric Power Industry Reform Act (EPIRA) passed in 2001.
Enrile was the only lawmaker who voted against EPIRA because he was not convinced that it could lower
power rates.
Enrile seeks to lift the Value Added Tax (VAT) on distribution, power generation and transmission, which is
passed on to consumers by distribution companies.
SB 3147 seeks to impose a uniform franchise tax of three percent on distribution utilities and eliminate
layers of tax. - With Delon Porcalla Jose Rodel Clapano, Celso Amo
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