Power whammy

A few months back, this column issued a warning about an impending triple whammy that could hit the country’s electric power consumers. The first whammy is the increase in the generation charges of the National Power Corporation or Napocor. That whammy has already hit us twice, the second of which was the 47-centavo Napocor rate hike in April this year. 

The second is a potential whammy: the possible loss of the valuable lifeline discount rate — the reduced charges that households with 200 kilowatthours or less consumption a month enjoy. A ruling now on appeal before the Supreme Court could do away with the so-called power rate unbundling. With that would come the demise of lifeline discount rates. That would mean poor families will have to pay the same power rate as those living in affluent subdivisions. We are still praying that this second whammy would never come.

The third whammy has now hit the power consuming sector. This is the anticipated application of the expanded value added tax on power generation and distribution. This whammy should be visible in our electricity bills before the end of the year.

There appears to be no loud outcry yet against the imposition of VAT on power. There are two possible reasons for this lull. First, there seems to be a positive effect of this move on the peso and on the capital market. Second, the VAT is yet to be reflected on our electricity bills. The reality of VAT on power, therefore, may have not yet hit the consciousness of the average Filipino household.

Despite the apparent absence of a public outcry similar to those of the successive Napocor rate increases, it is a must that the government show intense and sincere efforts to open "air valves" through which a public suffocated by skyrocketing electricity costs could breathe.

The first "air valve," as this column has always underscored, is the lifeline discount rate. The life of that benefit hangs in a delicate balance as the Supreme Court deliberates on a Court of Appeals ruling which junked rate unbundling. If the CA is upheld, lifeline discount rates become a thing of the past.

The second air valve, energy sector experts point out, is the so-called "minimum energy quantity" or MEQ — the amount of power that Meralco is allowed to buy from its own independent power producers.

It will be recalled that power industry observers called this column’s attention a few months back on the issue of whether or not it would be more beneficial to power consumers if Meralco buys more power from its independent power producers rather than from Napocor.

These observers pointed out that it may be more expensive for Meralco to buy more power from Napocor than from First Gas and Quezon Power. The reasons are the two recent hikes in Napocor generation rates, and the built-in transmission charges billed by the National Transmission Corporation. There is a higher net generation charge by Napocor, these observers pointed out. This fact seem to favor buying less from Napocor and more from Meralco’s own IPPs.

In addition, statistics showed that Meralco’s power producers have lower variable costs than Napocor.

Our readers would also recall that our column piece on the possibility of lowering power costs by adjusting the ratio of what Meralco buys from its IPPs and from Napocor sparked a heated debate. There were groups which urged Meralco to buy more power from Napocor saying to do so would result in lower electricity bills.

This is, perhaps, a settled issue by now. Last month, we did enjoy lower electricity bills after Meralco was compelled to buy more power from First Gas and Quezon Power. This was due to what Napocor announced was a maintenance shutdown. It had to stop the operations of some of its major power plants. Meralco had no choice but to shift the ratio of the power that it sources in favor of its IPPs.

The relief was immediate: by buying less from Napocor, power consumers in the Meralco franchise area enjoyed a 23-centavo per kilowatt-hour reduction in their electricity bills. For the average Filipino family that uses up 400 kilowatt-hours a month, that was a clear P92 reduction in what they pay for electricity.

This column asked this question: if we pay lower bills when Meralco buys more from its IPPs, why not increase the percentage even more to favor these IPPs?

There were a host of answers. One answer which stood out was this: Meralco is Napocor’s most valuable customer. Napocor needs to show that it has an attractive supply contract with Meralco if the former’s generation assets are to attract private sector buyers.

The bottomline is, we have to make the sacrifice to help the government sell off Napocor assets.

This may be a worthwhile sacrifice. After all, Napocor is the country’s biggest debt burden. Privatization could mean solving its billion-dollar debt problem and going for competition in the power generation sector. Competition could mean competitive rates. And competitive rates should benefit customers.

There are talks, however, that Napocor is having second thoughts about privatization. Electric cooperatives and the Philippine Electric Plant Owners Association are already up in arms against a looming move to undertake a piecemeal privatization of the assets of the state-owned firm.

If that be the case then, there might be no need for an attractive power supply contract for Napocor to dangle before prospective asset buyers.

In which case, could they just please allow us to enjoy lower power rates by letting our distributor buy less from power from Napocor?

They have shown that it can be done. What is keeping them from doing it some more?

Workaholic QC dad

There’s an office inside the Quezon City Hall which can be likened to the clinic of a favorite pediatrician, in addition to those of the mayor and the vice-mayor, of course. Overflowing, if not fully packed, with needy constituents, the office of councilor Winston ‘Winnie’ Castelo  is the busiest at the second floor of the building where members of the city council work.

And lots of work is what is keeping Winnie busy. Everyday from Monday to Friday, he personally manages his office to attend the various needs of Quezon City residents from District 2. These needs range from simple financial aid to water and housing problems.

Even if his staff can do the talking, the councilor makes it a point to personally meet his guests from all walks of life to know and address their  nittiest  problems. His favorite days are Mondays and Thursdays since these are the days when ‘Peoples’ Day’ are held, says Dimples, Winnie’s secretary who describes his boss as ‘workaholic’.

Serving the poor takes many forms for this QC dad. He caused the water connection of various depressed areas in Quezon City through the cooperation of Maynilad, provided loans for small