Drop in oil prices likely to cut down power rates

CEBU, Philippines – With the continuing drop in oil prices in the world market, it has now become probable for electricity rates to go down as well.

According to Department of Energy Visayas director Antonio Labios, calls to cut electricity costs have been raised amid the plummeting global oil prices.

Labios said power generation companies that use bunker fuel or diesel could consider slashing power rates.

He added the Energy Regulatory Commission has a formula on fuel price adjustment which is set in the agreement between power generators and distribution utilities.

Kung duna may petitioners, ERC [could look into that] kay naa na silay fuel adjustment. In general, naay mga lakang nga paus-usan ang fuel," the energy official said.

Electricity produced by natural gas and coal power plants could also be cut as rates of the two adhere to the falling world prices, he said.

Oil price

Global oil rates have dropped sharply over the past six months.

Price of crude oil has decreased by nearly half to below $59 per barrel, down from $107 months ago and the lowest rate since the global recession in 2009.

The increased production of the Organization of Petroleum Exporting Countries  despite the surplus in oil supply has been attributed as one of factors of the dropping oil costs.

The sharp price drop has significantly triggered revenue shortfalls in many fuel exporting countries.

But stock market analyst Lexter Azurin of UniCapital Securities, Inc. told The FREEMAN the surprising plunge in oil price is beneficial for oil importing countries such as the Philippines.

He said: “Inflation concerns have eased, especially with the recent drop of crude oil.”