Electronics sector wants open access to electricity

The Department of Energy (DOE) said yesterday the move to accelerate the implementation of the open access scheme in the electricity sector has received a favorable response from various industries.

Energy Secretary Vincent Perez said the Semiconductor and Electronic Industries in the Phils., Inc. (SEIPI) wrote him expressing support for certain bills pending in Congress, particularly the one that seeks to fast-track the open access.

"The industry supports such move of the legislators as this would be a big relief in terms of our efforts in reducing the cost of doing business here in the Philippines," SEIPI executive director Ernie B. Santiago said, in his letter to Perez.

SEIPI is the largest and leading organization of foreign and Filipino electronics companies in the country. Most of its member companies are located within the franchise area of a distribution utility, which is the exclusive power distributor in the area.

Santiago said the open access scheme will allow SEIPI members to choose the cheapest and most efficient supply of power that meets their requirements. Open access will break the monopoly of the power utilities as the exclusive distributor of electricity in their respective franchise areas.

Under the proposed accelerated open access system, electricity manufacturing firms and other end-users with a monthly consumption of at least one megawatt (1 MW) will be allowed to source power directly from generating plants as early as June next year by using the power lines of distribution companies.

"If the accelerated open access will make this happen faster, we will support such move," Santiago said.

According to Santiago, one of the major concerns of the semi-conductor industry is the high cost of power, adding that electricity accounts for 10 to 20 percent of electronics manufacturing cost. The average monthly consumption of a medium-sized semi-electronics industry usually amounts to P5 million to P10 million.

SEIPI also welcomed the decision of President Arroyo to reduce the cost of power of the state-owned National Power Corp. (Napocor).

President Arroyo ordered last May 8 Napocor to peg at a uniform rate of 40-centavos per kilowatthour (kWh) its purchased power cost adjustment starting this month. This would result to a reduction of P0.10 to P1.13 per kWh depending on the grid. At present, Napocor’s average PPCA is about P1.25 per kWh. This will be reflected in the monthly billings of consumers by July.

Santiago pointed out that in the last six years, electricity consumption of the electronics manufacturing sector had gone up to meet the growth in demand for the product but at the same time the costs of power had also doubled, bloating the companies' operating costs.

This, Santiago said, makes it difficult for them to compete with other countries. "Any move by the government in making the industry’s production set-up more cost effective and efficient would bring a lot of competitive edges the Philippines has to offer. Let us make sure that we can capitalize on those and work on areas that we are not doing well," he added.

The Philippine electronics industry is the biggest export sector of the country, accounting for more than 70 percent or $22 billion of the total Philippine exports of merchandise goods.

Santiago explained that the opening of the China market might result in excess capacity in the electronics sector, which could led to the reduction in the price of the product.

"The reduction in the power rate shows that the government is sincere in its well intended plan to work with the industry in facing the global challenges and changes ahead, particularly the threat being posed by China to the Philippine electronics industry," he said.

Utilities and large companies sourcing their electricity supply from Napocor will fully enjoy the impact of this reduction or about P1.13 per kWh savings in the Luzon area and about 67 centavos per kWh for those located in the Cebu-Negros-Panay grid. The reduction will be reflected in the electricity bills not later than July this year.

Some large utilities may not fully enjoy the reduction as some distribution utilities like the Manila Electric Co. (Meralco), where the companies are located, source a large portion of their supply from other independent power producers (IPPs).

The actual reduction for end-users will vary depending on their location and the distribution utility’s losses and purchases from its own IPPs.

Perez said Napocor assured that the full benefit of the reduction will be enjoyed by end-consumers of distribution utilities that source 100 percent of their power from Napocor. – Donnabelle Gatdula