Palace: No magic wand to reduce power costs

MANILA, Philippines - Malacañang is awaiting a proposal from Congress on the issue of power costs. 

Deputy presidential spokesperson Abigail Valte said the law limits the actions of Malacañang, referring to the Electric Power Industry Reform Act (EPIRA).

“There is no magic wand to wave,” she said. “While you believe that the executive has so much power, (it is) perceived power, we are limited by what the law says.”

Valte said “it depends on the proposal, and also remember that the President is very careful about using his certification powers,” when asked whether President Aquino would certify as urgent bills seeking to amend EPIRA. 

“Normally, the process is such that we look at the bills that are already pending in Congress, not the ones that are initiated by the administration,” she said.

Aquino has asked agencies to look into the problem and to find possible solutions within the law, Valte said.

Various bills have been filed in Congress seeking to amend EPIRA.

Tight supply to raise prices?

Electricity rates might shoot up again in Luzon this summer if unpaid power producers are unable to generate power to meet higher demand.

The Philippine Independent Power Producers Association (PIPPA) said a tight power supply situation might appear in summer if power generators are left unpaid because of the Supreme Court’s 60-day temporary restraining order (TRO) on Meralco’s rate hike.

A tight power supply situation happens when power producers are unable to supply enough electricity to meet demand for a certain period.

It leads to high prices at the Wholesale Electricity Spot Market (WESM), the country’s trading floor for electricity.

In November 2013, due to tight supply at the spot market, the price of electricity for Luzon in the spot market rose to P15.51 per kilowatt-hour from P6.16 per kwh in October.

The higher rate was reflected in the December 2013 bills of consumers. 

Speaking to reporters yesterday, PIPPA president Luis Miguel Aboitiz said  while the TRO’s impact differs for each generator, those that have weaker balance sheets might not be able to continuously generate capacity if the issue drags on and they are left unpaid for the fuel supply.

For now, electricity demand is at its lowest so there is no supply problem, he added.

Meralco has not yet been able to pay power producers roughly P10 billion because the TRO prevents it from collecting from its 5.3 million customers.

Aboitiz sees a problem if the issue drags on beyond March and unpaid power generators are unable to generate more electricity coupled with the lack of rain to power hydro plants.

“If there are no forced outages, there won’t be any problem. Fortunately, this is the time of the year when demand is at its lowest,” he said.

“This is from Dec. 20 to March 15. If we have large plants that fail or absolutely no rain in March, that would bring in a tighter power situation. “The impact on the industry depends on how long this lasts. You cannot have one impact for the whole industry.” 

Aboitiz hopes the problem is resolved as soon as possible.

“The consequence is minimal if it’s resolved quickly,” he said.

The SC has set oral arguments on the petition filed by militant groups on Jan. 21. – Alexis Romero, Iris Gonzales