Solon says power rate increases alarming

BAYAN Muna Congressman Teddy Casiño said that the trend of power rate increases is a cause for alarm and added that the impact of the unjust P1.00 per kilowatt hour (kWh) increase to hit power consumers in Metro Cebu should not have been accepted since the vagaries of the Wholesale Electricity Spot Market (WESM) is a complex scheme that can be manipulated by selfish interests.

Casiño made the statement as the Manila Electric Company (Meralco) passed on to consumers a 54 centavo increase for the month and there is a threat of rotating brown outs in Luzon. “The country has yet to recover from the Mindanao power crisis and the power rates in the southern island are still exorbitant and now almost every power grid in the nation is pushing for an increase. This is a very alarming trend considering that world oil and coal prices are going down since January. Why are our electricity rates going up? World oil prices are US$80 per barrel and the average selling price of Indonesian coal (which Philippine coal fired plants use) will drop to US$78.80 per ton this year,”

“Yet again we should be wary that this trend might be deliberately aimed at manipulating Wholesale Electricity Spot Market (WESM) prices. We are calling on regulators, especially the Energy Regulatory Commission (ERC), to keep their eyes wide open and put their ears on the ground and watch out for signs of price manipulation,” he added.

“I understand that the Visayan Electric Company (Veco) as a distribution utility is merely passing on to consumers the 85-centavo per kWh increase in the generation charge due to higher costs of power bought at the Wholesale Electricity Spot Market (WESM) and the power price adjustments implemented by Napocor to recover so-called fuel, purchased power and foreign exchange costs. But why should we accept this price hike when it will bring negative impact to both residential consumers and businesses, especially small and medium enterprises that need cheaper power to survive?” said Casiño, who also chairs the House Committee on Small Business and Entrepreneurship Development that attends to policy making for micro-, small and medium enterprises (MSMEs) in the country.

Casiño was in Cebu recently to join the Suroy Suroy sa Sugbu and the Obra Negosyo Eskwela Countryside Enterprise Business Upliftment (ONE CEBU) Awards for best MSME business plans.

“The higher Napocor rates charged to VECO is also unjust. Why do Cebuano residential and business consumers have to suffer due to the generation rate adjustment mechanism (GRAM) of P0.4847/kWh for the next 10-and-a-half years and the incremental currency exchange rate adjustment (ICERA) of P0.1213 for the next five years? Getting power from Napocor and the WESM with unjust and possibly manipulated prices is not good for business and employment in Cebu or any other part of the country. And the Energy Regulatory Commission (ERC) just approves every petition for a rate hike even if it will have dire results to millions of people,” Casiño said.

Veco is the country’s second largest private electric utility, with a franchise area covering the cities of Cebu, Mandaue, Naga and Talisay and the municipalities of Consolacion, Liloan, Minglanilla and San Fernando that have a combined population of 1.73 million. It is managed by the Aboitiz and Garcia families of Cebu.

Veco gets 9.21% of its power supply from WESM, where 2012 prices doubled to P9.9578/kWh in May from P4.8450/kWh in April. Veco gets the rest of its power supply from Napocor (29%), Cebu Energy Development Corp. (32.49%), Green Core Geothermal Inc. (25.14%) and Cebu Private Power Corp. (4.12%).

“The national government should take strides to lower power rates in Cebu. It can start by repealing the wrong national government policy that permits these price hikes to happen.  It is high time for Congress to repeal the Electric Power Industry Reform Act of 2001 (Republic Act 9136) as it has not brought down power costs,” Casiño said.


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