Exporters frown on power rate hike

CEBU, Philippines - While others have accepted the decision of the Energy Regulatory Board to allow the National Power Corporation (Napocor) to increase rates as a necessary move, exporters have expressed concerns that additional power costs will be an added burden for them.

This ensued after the Visayan Electric Company announced to increase its basic charge by 90 centavos per kilowatt-hour after ERC authorized Napocor to raise rates in the Visayas by P1.146 per kilowatt-hour. Veco gets 75 percent of its total power requirement from Napocor.

PhilExport-Cebu, the umbrella organization of the export industry here, feared that the 90 centavo increase will add on to cost woes of the already battered export industry, which is now suffering from dwindling demand and cutthroat competition in the global market.

PhilExport-Cebu advocacy officer Jun Abines said that although they are aware of a long battle ahead of them, the industry remains hopeful that they will be heard anyhow, by the ERC.

Abines formally aired the industry’s concerns during the ERC hosted expository and pre-trial hearing recently held in Cebu.

He admitted though that exposing their concerns on the increased electricity rate may seemed a futile action, as ERC has already signaled Napocor to implement the adjustment that will be reflected in the March billing statements of clients, including Veco.

He said that hike on power costs will not only be a “nail in the coffin” for the already struggling export sector but will in effect discourage foreign direct investments to the country.

“The Philippines is said to have the second most expensive power cost in Asia, next to Japan. An increase will make us more or less competitive at this time. We hope that they could exhaust all their means to alleviate such increase,” Abines said.

Officers and board members of the export sectors in Cebu are expected to meet immediately to discuss on this matter. As ERC still has 12 months to make changes on its decision, thus public hearings are being conducted across the country.

The export sector is one of the biggest power consumers in Cebu, as manufacturing operations, like furniture making, largely utilized machineries and equipment that consume heavy electricity.

During the recently conducted expository and pre-trial hearings for Visayas, ERC Commissioner Rauf Tan sad that ERC, NPC and PSALM (Power Sector Assets and Liabilities Management Corporation)will be expecting more queries and possible objections regarding the provisional rate increase.

According to ERC the provisional rate increase it granted to NPC may still change depending on the outcome of the hearings, the evidences to be submitted by NPC and those of the participants in the proceedings as intervenor.

“At the end of the day, we want the consumers to win. We want to assure them that the providers of electricity are viable so that they [consumers] can get the electricity they needed. We need to take a look at the long term effects of this decision to the consumers,” Tan said.

ERC said that the rate increase is intended to immediately alleviate NPC’s current financial difficulties given its current costs of generating power, including the costs of the discounts that it is mandated to extend to certain customers.

In support to the application is the financial statement duly audited by the Commission on Audit (COA), showing the cost of operations for the test year 2007.