Outplayed

Unfortunately, there is no medal awarded the nation that played the diplomatic game best, using the Winter Olympics in Peongchang as tableau.

Very close to the start of the games, North Korean dictator Kim Jong Un responded to overtures from Seoul by agreeing to a meeting at the demilitarized zone. Things happened very quickly after that. The North Koreans agreed to send athletes to compete under the unification flag of the two Koreas. For good measure, he sent a cultural troupe to perform along with a stunning “cheering squad.”

Nearly on the eve of the games, Pyongyang dispatched Kim Jong Un’s younger sister Kim Yo Jong to the opening ceremonies. Kim Yong Nam, North Korea’s 90-year old ceremonial head of state, accompanied the young sister. Yo Jong is reportedly a very influential adviser to her older brother.

The duo easily eclipsed the presence at the opening ceremonies of US Vice President Mike Pence and presidential daughter Ivanka Trump. 

Pence’s journey to South Korea was blighted by the refusal of American athletes to meet with their Vice President. When Pence was state governor, he had rehabilitation programs organized for gays. 

The more important thing however is Yo Jong personally handing South Korean President Moon Jae-in an invitation from her brother to visit Pyongyang. Moon is an advocate of diplomatically engaging North Korea. 

The public display of affection between the Koreas seems to run counter to hardline US policy of rejecting negotiations until after North Korea dismantles its nuclear program. Pence had to declare there was “no sunlight” between the US and her allies in the region. In late breaking news, however, it was reported that the Americans were open to negotiations. 

The eclipse of Pence is symptomatic of the extent to which US influence in Asia waned since Trump took office. The hardline Vice President arrived in South Korea without a diplomatic plan. Washington was so obviously unprepared for the diplomatic blitz mounted by Pyongyang. 

Kim Jong Un, who Trump derisively calls “Rocket Man,” is not so dumb after all. The seeming diplomatic breakthrough scored by Pyongyang is nothing less than brilliant. It effectively counters the US-led effort to isolate North Korea, cripple it with economic sanctions and perhaps mount a punitive air strike on North Korean missile facilities. 

Trump surely wants to bloody North Korea’s nose, if only for the opportunity to crow about it. That might be difficult to do now with Kim Jong Un effectively fighting out of the corner and dictating the course of diplomatic events. 

Beijing, albeit very politely, is pleased with the diplomatic developments. Tensions in the Korean peninsula relaxed quite remarkably after the recent flurry of diplomatic initiatives. That relieves a lot of pressure on China.

The rest of East Asia shares that relief.

Generation costs

In the next billing cycle, expect an increase in electricity charges. Meralco, in order to cushion the impact of the rate increase, announced a two-stage upward adjustment beginning with the February bills.

The increase cancels out the rate reductions implemented by the electricity distribution company for the months of December and January. For February, power rates will increase by P0.85 per kWh. A smaller increase happens in the following month.

In December, with lower power demand, Meralco reduced its rates by P0.90 per kWh. Those reductions reflected lower prices in the wholesale electricity spot market (WESM). 

 In January, Meralco reduced rates by P0.526 per kWh. This reflected lower capacity fees following the annual reconciliation of outage allowances. 

The capacity fees for power supply agreements (PSAs) have normalized this month. The depreciation of the peso and the imposition of a VAT on the transmission charge mandated by the TRAIN law are cost factors now pushing up the price of power. Add to these the slightly higher generation charges due to fuel price increases.

All the factors pushing up power costs are pass-through charges for the power distributor. The added power rates will be paid to the generation and transmission companies. Meralco is simply collecting in behalf of the power generators and the transmission companies.

The power distribution company emphasizes that it will earn nothing from the higher bills consumers will bear starting this month. That emphasis is made because consumers tend to blame the distribution utility for any increase in the final billing consumers receive.

Since the EPIRA law was passed several years ago, the costs for generating, transmitting and distributing electricity were unbundled to improve transparency in the industry. The unbundled charges are all reflected in the final bill consumers get. Meralco’s customers can check their own bills themselves to see where the rate increase is coming from.

The increase in electricity rates will contribute only minimally to the inflation rate – although it does include factors attributable to the passage of the TRAIN. The spike in the inflation rate is a current concern. The BSP increased its inflation forecast to 4.3 percent at least for the first quarter of the year.

Inflation has spiked more than anticipated. The higher inflation threshold was initially set at 4 percent. 

Contrary to the widely held perception, the inflationary spike is not entirely due to TRAIN. The main driver pushing up the inflation rate is the continuing erosion of the peso’s exchange value. Some analysts are predicting that the peso could depreciate to P54 to the dollar by yearend. 

The peso’s softening is not en entirely bad thing. It will help curtail domestic demand for imported goods and increase the purchasing power of families dependent on remitted incomes.