Blame it on the whole set-up

As a consumer, the Supreme Court’s issuance of a temporary restraining order on Meralco’s recent power rate hikes is a welcome reprieve, especially since the total amount in three months’ time is admittedly going to be the highest increase by the electricity company in its corporate existence.

Unfortunately, this TRO is also something that will cost consumers more in the long run when the 60-day moratorium is lifted and all the added costs (which by the way would be substantial), would need to be recovered by Meralco from its customers.

Yes, my dear readers, Meralco will ultimately have to pass on the cost that it incurred by not charging its customers the true price of electricity. Once again, this is thanks to the meddling nature of the highest court in the land.

Makes one wonder why there isn’t a TRO issued to stop oil companies from raising LPG prices which recently increased by about 25 percent. Will this happen next? But that’s for another column another day.

Go for the cause

Going back on the TRO on the power rate hike, the Supreme Court should have slapped its ruling on those that had caused the extreme power rate adjustments that would burden consumers in the coming months. After all, Meralco does not earn a single centavo from generation charges.

As had been vetted by the Energy Regulatory Commission from the billings of power suppliers, the purchased generation cost of Meralco had legitimately increased from October to November to cause an average generation rate spike of P3.44 per kilowatt hour in December.

It is unfortunate that this rate increase happened because of poor planning by our bureaucrats whose job was to foresee and prevent this confluence of negative events coming together, and therefore penalizing consumers. If the Department of Energy is being flogged at the moment, it is just paying the price for its negligence.

Better planning could have prevented the resulting tight generation supply situation in the Luzon grid that was caused by scheduled, rescheduled, and unscheduled shutdowns of power plants coinciding with the maintenance of the 2,700-MW Malampaya natural gas plant.

Scrap WESM

Naturally, with the shortage of electricity supply in the grid, the Wholesale Electricity Spot Market where excess power from other producers is sold would only be selling electricity at higher prices.

This is why WESM will not really work yet in the country. There are too few industry players to constitute a truly free market that can be beneficial to consumers. It’s useless to have a system that will sell cheap electricity during times when there’s an abundance of supply; or sell electricity at prohibitive rates when supply is tight.

What’s more, when there’s cheap electricity available, Meralco — as the biggest buyer of electricity in the country—will likely choose to protect its affiliated power plants by buying from them regardless of their higher price vis-à-vis the spot market.

The WESM is not working for the consumer, and neither is it really meaningful for power producers when there is a power supply glut. The only time that power plants can chalk some windfall earnings is when electricity supply in the grid is tight, although they had to slash their opportunistic high prices recently to give in to public pressure.

Real problems

The real problem with high power rates is not Meralco per se but the fact that our whole power industry is screwed up. Regardless of a decade-old law that vowed to correct this problem, nothing much has changed.

The Luzon grid needs new power plants that will amp the current base load capacity in such a way that any major problem with a big power generating plant will not create a brownout situation or a spike in power rates for consumers.

It is imperative that this problem is immediately given attention. Most of the country’s power plants are due for scrapping because they are inefficient and unreliable, and consequently are way too expensive to operate.   

Realistically speaking, we will need to fire up at once an additional base load capacity of around 2,000 megawatts to avoid any future inconveniences from power deficiencies. The government will have to devise a quick plan to build and commission these needed power plants.

Make EPIRA work

It is also time to review how to truly make the Electric Power Industry Reform Act (EPIRA) relevant to the needs of this country. Before the Philippines can really move forward in terms of economic activity, getting competitive power rates on the ground is crucial.

If we have to rebuild the whole power industry from scratch so that manufacturing plants, commercial establishments and residential owners will have reliable, but competitively-priced electricity, so be it. If we need to junk the old power plants to make way for a better future, then it has to be done.

And we’re not talking here about letting the government build new power plants. Using taxpayers’ money to build, operate and maintain power plants is the reason for the current mess we’re in today. Let’s not forget that government should stick to the business of governance, and let the private sector handle the business of running a power plant.

What we need now is an acceptable and working system that investors will be willing to risk their money on. Only by building one of the country’s major infrastructure pillars can we truly feel optimistic about being Asia’s next tiger economy.

Champions League 2013 National Collegiate Championship

The 2013 collegiate basketball season has ended with De La Salle U Green Archers winning the bragging right as the National Collegiate Champion over more than 230 collegiate teams involved in over 35 “mother leagues” tournaments nationwide. This is the second national title for the Green Archers over a span of 12 years.

One of the highlights of the 2013 Champions League (PCCL) games is the extensive coverage provided by ABS-CBN Sports. All the regional championships held in Vigan, Sorsogon, Davao and Cebu and the step-ladder games in Tanaun City in Batangas were televised and aired over Studio 23 nationwide.

The television coverage, complete with game analysis, extended up to the final four and championship series between DLSU and SWU Cobras. The televised games were also replayed and aired during the holiday period in response to requests received via social media, e.g., Facebook and Twitter.

The PCCL Board of Trustees extends its appreciation to the ABS-CBN Sports team especially to Dino Jacinto Laurena, Peter Musngi and director Abet Ramos for this valuable support.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.