Consumer group urges creation of supply co-ops for power purchase

In a bid to lower their power bills, the National Association of Electricity Consumers for Reforms (Nasecore) has urged consumers to form supply cooperatives and buy electricity in bulk which will soon be available through the Wholesale Electricity Spot Market (WESM) system.

However, the Electric Power Industry Reform Act (EPIRA), which mandates the operation of the WESM, currently excludes residential consumers from availing of the lower bulk prices.

Instead, only end-users with a monthly average peak demand of at least one megawatt will initially be the contestable market that the consumer-owned supply cooperative can service.

"We may wait for amendments to the law but the quickest way to take advantage of WESM is by forming consumer-owned supply cooperatives that will provide power to the contestable market," Nasecore president Pete Ilagan said.

He said these cooperatives would "replace the supply business function of distribution utilities like Meralco and take care of retailing cheaper electricity bought from generation companies."

"The co-ops will just have to pay the wheeling charges to Meralco and the National Transmission Corp. for the use of their distribution and transmission facilities when retail competition is implemented in July next year," said Ilagan.

WESM started trial operations in Luzon and could commence commercial services as early as the last quarter of 2005.

Ilagan explained that consumers forming supply co-ops would be able to buy electricity at rates cheaper than Meralco, which prioritizes Meralco affiliate-independent power producers (IPPs) that sell power at rates higher than the National Power Corp. (Napocor).

"We just wish to correct an anomaly in the current system where a distribution utility bound by law to provide the cheapest possible cost of power turns a blind eye on the cheap rates offered by Napocor to favor its own IPPs," said Ilagan.

Citing data from both Meralco and Napocor, the Nasecore official said the utility firm bought more electric power from its IPPs at P4.21 per kilowatthour in 2003 when it can source from Napocor which sold power at a competitive rate of P2.46 per kwh.

Ilagan cited a precedent in the First Rochdale Cooperative in New York City, which gained leverage in purchasing electricity for its estimated 500,000 members by aggregating and averaging their numbers and electric usage.

At present, the co-operative is the only electric service provider in New York owned by the consumers themselves and benefit from it with rates that are cheaper by as much as 40 percent, compared to rates offered by Con Edison, the co-op members’ previous distributor.

According to Ilagan, Nasecore is now in the process of educating more consumers, especially barangays, private villages and subdivisions, on the feasibility and merits of forming such supply co-operatives.

He said Nasecore will push for necessary amendments to the EPIRA in order to win concessions for consumers and provisions that provide for a foil against monopolies and monopoly abuses.

"The initial reaction we get is one of hope. Because the supply cooperatives of the future may finally give us a respite from the abusive monopoly that slap endless rate increases on hapless subscribers," said Ilagan.