Ecozone power perk bucked

November 7, 2011 at 10:50

DISCOUNTED POWER RATES for ecozone locators should be allowed to expire next month as scheduled, the Power Sector Assets and Liabilities Management Corp. (PSALM) said, citing cost and supply constraints.

“Although we fully understand the possible implications of this decision to the economy, it is no longer reasonable for us to renew the power supply contract with Meralco (Manila Electric Co.) given the limited supply that PSALM currently has and the high operating costs of generating power for the remaining PSALM-owned plants in Luzon,” PSALM President Emmanuel R. Ledesma, Jr. said in a statement.

PSALM owns and operates, along with National Power Corp. (Napocor), the remaining unprivatized power assets of the state that provide power to ecozones via Meralco.

Mr. Ledesma admitted that a decision on the discounts “is not a matter that only PSALM can undertake … it is a product of a contractual agreement between the power customers, in this case the economic zones and the power supplier.”

Meralco, the Philippine Economic Zone Authority (PEZA) and the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) last month wrote to Napocor about extending the special electricity rates given ecozones to Dec. 12, 2012.

The scheme, scheduled to expire on Dec. 25 this year, began in Sept. 19, 2007 and was an expansion of a similar Meralco-Napocor deal for an ecozone.

Napocor and Energy department officials have said the matter needs to be discussed with the PEZA and the Energy Regulatory Commission (ERC).
Sought for comment, Energy Undersecretary Josefina Patricia M. Asirit said the Energy department “will have to talk to PSALM about the issue.”

Under the Ecozone Rate Program, locators pay a generation rate of P3.46-3.52 per kilowatt-hour (kWh) depending on consumption. In comparison, industrial consumers connected to Meralco pay P5.347/kWh based on October rates.

Locators hope the discount scheme will be extended until open access is declared by the ERC. Open access, a regime where consumers of one megawatt and up can choose where to source their power, was supposed to be declared by Dec. 26 but has been pushed back to sometime late next year.

“We are still going to push for the extension since there is no open access yet. Nothing is final yet so we are still hoping it can be extended until there is open access and we can connect to other sources of power,” SEIPI President Ernesto B. Santiago said.

PSALM claimed that after privatization of many power assets in Luzon, it “ceased to become the sole supplier of electricity from which the ecozones may procure energy”. It noted that with the end of the supply contract, Meralco can choose to negotiate with another power producer if it wishes to continue the discounts.

The government, however, will be unable to ensure private power producers will provide the same low rates to ecozone locators, the Energy department’s Ms. Asirit admitted.

“Government may be [going] beyond its authority to order independent power producers from offering lower rates to PEZA because they are private corporations,” she said.
By: E. N. J. David
Source: Business World, Nov. 6, 2011
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