Palace: Public may have to bear with higher electricity rates

MANILA, Philippines -  The public might have no choice but to bear higher electricity rates because of the ongoing rehabilitation of the San Jose substation of the National Grid Corp. of the Philippines (NGCP) in Bulacan.

Malacañang said the increase is inevitable since the ongoing repairs also triggered an increase in the Wholesale Electricity Spot Market (WESM), a trading platform for electricity where power generators sell their excess capacities to utilities.

Presidential spokesman Edwin Lacierda said Energy Secretary Jose Rene Almendras reported the repair of the San Jose facility could last until next month.

The San Jose facility provides approximately 40 percent of Metro Manila’s electricity needs and acts as a gateway to the supply of electricity from less costly coal-fired and hydroelectric power plants in Northern Luzon.

The substation’s transformers broke down in July 2008 after only 10 years, an extremely rare occurrence given that the normal transformer life span is 40 to 50 years.

The breakdown also caused widespread power outages and an increase in electricity prices.

To improve the reliability of the facility, NGCP began to upgrade San Jose’s transformers last year.

The rehabilitation work, however, was put on hold to ensure to power outages would not occur during the May 10 elections.

While the rehabilitation of the San Jose plant is ongoing, customers of the Manila Electric Co. (Meralco) will be paying 44 centavos per kilowatt-hour (kwh) more for their electricity this month.

Lacierda said he would have to consult with Almendras as to what the government could do to stop the increases in electricity rates.

He said that under the Electric Power Industry Reform Act (EPIRA), distribution companies were allowed to pass on to their consumers the increases in generation charges.

“We’re just following the law,” Lacierda explained. “Again, we will discuss it with Secretary Rene Almendras, if he has plans or programs on how to improve the law (EPIRA),” he said. Lacierda recalled Almendras telling him of the need to review EPIRA to make the law more responsive to the needs of the current situation. “But all these are still under discussion, that’s what we are studying,” he said.

Lawmakers also explained the purpose of the EPIRA law is to reduce the cost of electricity to consumers, Iligan City Rep. Vicente Belmonte Jr. said privatizing some of the government’s power plants could defeat the purpose of the EPIRA and could even lead to higher power rates.

Belmonte, for his part, filed a resolution expressing opposition to the sale of the Agus and Pulangui hydroelectric power plants in the Lanao provinces.

Belmonte said the purpose of his resolution is “to give the new administration ample time to review, modify and implement its energy policies in accord with EPIRA.”

He said the EPIRA law had exempted the power plant complexes from the initial sale of assets of the National Power Corp. (Napocor).

The law provides that “their ownership shall be transferred to the PSALM (Power Sector Assets and Liabilities Management) Corp. and both shall continue to be operated by the Napocor.”

It further provides that “said complexes may be privatized not earlier than 10 years from the effectivity of this Act. The privatization of Agus and Pulangui complexes shall be left to the discretion of PSALM Corp. in consultation with Congress.”

On the other hand, 13 congressmen from the Eastern Visayas region called on the government to immediately implement the retention right of local governments over geothermal power plants. Leyte Rep. Sergio Apostol led the lawmakers in their appeal to implement the 25 percent retention right of the host region over the power capacity of the Tongonan geothermal power plants.  – With Jess Diaz, Miriam Desacada