POSTSCRIPT / September 4, 2007 / Tuesday


Philippine STAR Columnist

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Can Reyes avert new electricity rate surge?

STARTING ANEW: Energy Secretary Angelo T. Reyes says that he has been given “very urgent” instructions by the President to lead several agencies in drafting a 20-year energy development program.

After six years, the Arroyo administration still does not have an energy program? What has the government been doing since electricity dawned on this country — aside from inflicting brownouts and rate surges?

Whenever a new official takes over his turf, he rolls up his sleeves and, without caring to look back, starts inventing new policies and programs. We are always starting, never taking off. Continuity is not in the vocabulary of the bureaucrat.

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ALL PLANNING: Somebody should tell President Gloria Arroyo that people in economic distress, and that is probably 88 percent of the population, do not understand nor appreciate long-range programs.

Talk of ambitious plans and issue press releases — and you end up with a dismal 18-percent trust rating on the crest of a supposed 7.3-percent growth of the Gross Domestic Product (which 99 percent of the people do not understand in the first place).

A tough general, Reyes can have more impact if he launches a search-and-destroy operation against the mafia milking the National Power Corp. and mercilessly manipulating electricity supply and prices.

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WESM MESS: The Energy secretary may also want to compare notes with Bukidnon Rep. Teofisto Guingona III, who warns of another impending rate increase resulting from the rigging of prices at the Wholesale Electricity Spot Market.

The WESM is a trading mechanism where power generators offer electricity for specific periods and quote a price. The exchange picks the best supply-price combination to purchase and distribute.

In theory, the WESM looks all right. But an audit has exposed alleged price manipulation traced to the same cabal at work at Napocor. Reyes may want to look into this.

The culprits may have thought their foul deed had escaped notice, but Guingona is insisting on a House inquiry.

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PAHIRAP: Guingona warned that power rates could soon increase by P2 per kilowatt-hour as a result of the price manipulation.

As if that is not pahirap (torture) enough, Napocor has announced a P0.74/kwh increase next month as a result of its deferred foreign exchange accounting adjustments for December 2005. That needs explaining.

Government generating plants are just awaiting the go-signal of the Energy Regulatory Commission for them to collect P9 billion (!) for electricity sold way back in September and October 2006.

The Bukidnon solon lamented that generators want to extract that much blood from consumers despite the discovery by regulators of price rigging. He said this translates into an increase of P2/kwh in consumers’ bills.

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UNUSUAL HIGH: The manipulation was exposed by then Albay Rep. Joey Salceda. He noted that rates were unreasonably high although there was no increase in demand and there was no calamity that disrupted generation and transmission.

Salceda noticed that prices had gone up suddenly to P6.88/kwh from P2.88, or a jump of a hefty P4/kwh.

Regulators found that state-owned generators, which dominate production and can therefore influence pricing, were involved in the irregularity. But until now no sanctions have been imposed.

Guingona, the opposition’s “Shadow Cabinet” member for energy, said if the same producers are allowed to collect for electricity sold in September and October 2006, it should be at the market prices prevailing then — not P4/kwh more.

Also, he disagreed with President Gloria Arroyo and her congressman-son Juan Miguel, who chairs the House energy committee, that the Electric Power Industry Reform Act (Epira) of 2001 be amended to bring down rates.

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MONOPOLY: Even before the WESM became operational in June last year, Postscript had warned that the system will not work at this time because Napocor still dominates the industry.

Napocor has about nine trading teams in the WESM representing its nine plants, including the 360-megawatt Magat hydroelectric plant, the 600-mw Masinloc coal-plant and the 700-mw Tiwi-Makban plant.

There cannot be true competition when a monopoly, in this case Napocor, lords it over the field. It still owns 80 percent of power plants despite a mandate for it to privatize.

Napocor is big enough to dictate the price mix at the WESM, and it does.

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CRUEL TRICK: Look what happened in June 2006, when the WESM opened for business. To go along with the President on the claimed positive effects of the WESM, rates were lowered.

Since President Arroyo had promised lower rates, Napocor humored her and sold way below its regulated price. A visibly pleased President went around talking of the declining rates.

I wonder if the President was told later that the introductory bargain price was just for show. As everybody who has seen zapped by soaring rates knows, the public is now paying very dearly for that cruel trick.

* * *

HIKE COMING: Data show that the WESM load weighted average price from June 26 to July 25 (2006) stood at P2.788/kwh. This is 38.5-percent lower than Napocor’s regulated rate of P4.5303/kwh.

But when it dived for the President, Napocor lost P1 billion in the first month of operation of the WESM.

Now Napocor has been raising its price to recover losses from that costly bargain gimmick.

In succeeding months, the average price of power rose nearly 250 percent. In the first trading month (June), bidding reportedly resulted in an average price of P2.72/kwh. It kept climbing until it reached P4.853/kwh in the third month.

Be forewarned: The price is expected to hit P6.88/kwh in the next few days!

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(First published in the Philippine STAR of September 4, 2007)

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