POSTSCRIPT / May 1, 2008 / Thursday


Philippine STAR Columnist

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GMA can, but doesn’t cut price of electricity

ALARM: Oil and power consumers’ advocate Raul Concepcion is beating the alarum bells, warning that consumers will continue to be singed by rising electricity rates all the way through June and even beyond.

Why does it take a private citizen (whatever you think of his possible motives) to do this? I thought the government, by definition alone, is supposed to look after the people’s welfare and lead them out of the darkness.

Is it because the government is actually in cahoots with our tormentors? Is it because many officials are in government just for the money?

Instead of taking the initiative to solve problems before they arise or get worse, the reactionary Arroyo administration usually moves only when the problem has already engulfed the community.

And when finally it moves, we are not even sure on whose side it is.

What will President Gloria Arroyo tell Labor today, May Day, about the rising cost of power and her reneging on her promise to stabilize, if not lower, electricity rates?

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MAKING HAY: Workers have the right to know on whose side the President is. 

It seems her right hand does not know what her left hand is doing. While she talks of stabilizing electricity rates, her team attending to power concerns (which includes — wink, wink — her two sons and a brother-in-law in Congress) seems bent on raising it.

The President’s men controlling the National Power Corp. and her family members in the House committee on energy are doing their best to perpetuate a regime of high fuel procurement costs resulting in continually rising electricity rates.

The modus operandi of the Napocor gang is an open secret: They cause a fuel shortage to justify emergency importation of coal through negotiated contracts — instead of public bidding and the less expensive long-range management of fuel inventory.

This multimillion-dollar racket is all too obvious, but the Mother Hen, ever solicitous of the material well-being of her brood, is not doing anything to stop it. Why?

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DARK SCENARIO: We were alarmed when Napocor announced days ago that its Independent Power Producers (IPPs) and power plants have enough coal. If experience is the best teacher, we know that when it says that, gad!, we better prepare for the worst!

That rosy picture painted by Napocor does not jibe with the dark scenario sketched in charcoal by Concepcion, the oil&power watchdog.

The real bad news had hit us ahead of the Napocor press release. We already knew that residential customers who use up to 200 kilowatt-hours a month will pay an additional P149 or 8.95 percent more — equivalent to about four kilos of commercial rice.

A household using up to 50 kwh a month will pay an additional P19, while a family consuming 70 kwh will shell out P35 more. A household consuming 100 kwh a month will pay an additional P61.

When the overpriced Napocor-procured coal comes in, watch the rates soar to the darkened sky.

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PRICE OF GRAFT: If only the Napocor mafia could moderate their greed, we would not see runaway generation costs padding the price of electricity at the Wholesale Electricity Spot Market (WESM), where power from various generators is mixed and traded at a composite price. 

With Napocor being the dominant WESM player, with a more than 70-percent share, its selling price virtually dictates the resultant rate.

How can Napocor, a government-run firm, quote lower rates when its fuel — a major determinant (at least 35 percent?) of the price of electricity — is imported at an unconscionable overprice?

By being forced to pay a high price for electricity, captive consumers are shouldering the cost of the overprice and the commission attached to the fuel purchase. In short, they pay the high cost of graft.

If we remove the cost of graft — which is at least 25 percent — imagine how reasonable would be the cost of electricity in the Meralco franchise area dominated by Napocor! 

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SUPPLY COSTS: Asked about the rates it is forced to collect and pay back to its suppliers, Meralco attributed the rate increases to a combined increase of 67.17 centavos per kwh in the generation, transmission and systems loss charges.

Meralco, the biggest distributor, said the generation cost rose by 51.88 centavos per kwh, the transmission cost by 7.59 centavos, and the systems loss by 7.70 centavos. (“Systems loss” refers to electricity lost to illegal connections and to heat as it flows through the lines.)

Meralco said the generation charge rose to P4.9073 per kwh in the April billing cycle from P4.3885 in March. It blamed the increase to high WESM prices, which increased by P4.75 per kwh in March and from P5.94 to P10.68 per kwh in February.

The composite cost from Napocor and WESM stood at P5.3692 per kwh in March, higher by 82 centavos than the average cost of supply from the IPPs at P4.5496 per kwh.

Factoring in transmission cost (averaging P1.91 per kwh for Napocor and WESM, and P0.7049 per kwh for the IPPs), the difference in the cost of electricity bought from the former and the latter would widen to P2 per kwh.

Note that in March, the average cost from Napocor and WESM combined was P7.2792 per kwh while that from the IPPs stood at P5.2545.

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(First published in the Philippine STAR of May 1, 2008)

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