Energy players discuss high electric rates

Can electric rates be pushed down and supply assured before a crisis?

It was a challenge energy industry players and stakeholders from the private sector have started to crack in hopes of averting a new power crisis.

Meeting this week at the Export Development Council offices in Makati, the team tasked to come out with an action agenda on energy for the Sept. 29 National Competitiveness Summit saw the need to bring down power rates and assure adequate supply in the near future.

The facts were clear. Electric rates in the Philippines remain second highest to Japan in all of Asia. On the supply side, no new plant has been built since after the term of President Ramos.

A looming power crisis was dreaded more than the high cost of electricity today. Participants called for the immediate meeting of a task force on energy which must determine, once and for all, if a power shortage is just around the corner or still years away.

Energy officials have projected that present generating reserves are still adequate until 2011 but others fear shortages may come earlier and will again box the government into using oil-fired power barges that will make electricity even more expensive.

Intermittent brownouts have been noted in Mindanao and the Visayas. These could spread to Luzon if one or two of the big power plants happen to conk out.

Private sector representatives pointed out that getting an environment clearance for a power project takes years. So is putting together the money to build one.

In all, a base-load plant takes an average of six years to put on the ground from making the decision to build one to getting it connected to the power grid.

On the issue on the high cost of electricity, three major areas where costs can be cut down were seen: the cost of generation which is the biggest, the cost of transmission, and that on distribution.

The Energy Regulatory Board (ERC) has been asked to review the present system of computing power rates, the performance-based rates which replaced the return on rate base (RORB) system used in the past. The old system had a built-in cap on margins.

The rates charged by the Transmission Corp. (TransCo) based on the new system was seen as too much and uncompetitive.

To bring down rates at least for energy intensive industries that use at least one megawatt of electricity, the business leaders sought for the acceleration of the implementation of the wholesale electricity spot market (WESM) and the MERALCO’s customer’s choice proposal. – PHILEXPORT News and Features