CitizenWatch warns of higher power rates

MANILA, Philippines - CitizenWatch, an independent network of citizen rights advocates, has criticized key guidelines of a Department of Energy (DOE) initiative regarding the sale of electricity in the market, saying it will result to higher electricity prices instead of lowering them.

“An unintended effect of this new process is burdening the already overburdened consumers with additional power costs,” said Wilford Wong, CitizenWatch secretary general.

The new process – issued via Department Circular 2015-06-0008 – mandates competitive bidding between distribution utilities and generation companies in the sale of electricity via the mediation of a third party expert.

This set-up, Wong said, will not work in an environment where there are not enough power generation players and will be prone to abuse, resulting in higher cost of electricity, especially with the recently released implementing guidelines.

“To lower power prices, the mechanism that we envision needs to put the consumers’ primary concern above anything else by not adding another pass on charge to the consumers,” said Tim Abejo, CitizenWatch convenor.

Power costs in the Philippines is one of the highest in the region, owing to perennially low supply and what many perceive as a prohibitive investment climate in the power industry.

Instances of market manipulation by big generation companies had also been identified, which the competitive selection process is meant to address.

However, CitizenWatch believes the new process itself is full of loopholes.

Wong explained: “We’re very suspicious of the provision on the selection of the third party experts. It’s so specific that it can restrict the participation of experts that may have experience in other forms of competitive selection.”

Compensating the appointed expert will also be at the consumers’ expense, he said.

There is also no provision in the guidelines for public stakeholder input in the selection of the third part experts, Abejo said.

“Without this safeguard, we fear that ordinary consumers will ultimately suffer from the additional burden of higher power prices,” he added.

The group cited similar efforts in the past, such as by the Central Luzon Electric Cooperative Association-First Luzon Aggregation Group, that only resulted to failure in the bidding process instead of lower electricity prices.

Any type of competitive bidding will not work because there is not enough power generation players in the market, which results to limited supply, Wong pointed out.

In a postion paper submitted to the Department of Energy and the Energy Regulatory Board, CitizenWatch has called for the suspension of the implementation of Department Circular 2015-06-0008 and urged the regulators to further study the repercussions of its implementation.