Friday, September 23, 2011

Business, labor, cause-oriented groups balk at high power costs

23-Sep-11, 2:28 PM | Michelle Orosa, TV5 and

(UPDATED - 5:20 p.m.) MANILA, Philippines – Business and industry leaders on Friday called on the Aquino administration to craft a road map to arrest soaring power rates as a labor party-list warned it would file a petition for a wage increase unless the cost of electricity is brought down.
Officials of the Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation, Philippine Steelmakers Association, Foundation for Economic Freedom and the TUCP (Trade Union Congress of the Philippines) party-list said government should take immediate steps to bring down power rates, which they described as among the highest in the world.
They also said that, 10 years after its enactment, the Electric Power Industry Reform Act of 2001 is not working.
The groups urged government to suspend all petitions to increase electricity rates, including one for a P0.39 hike in the stranded cost that is pending before the Energy Regulatory Commission (ERC).
"We want government to think twice, thrice before approving any increase in electricity. We are not against power costs, but we want, as businessmen, that rates be kept as they are now, without increases," PCCI president Francis Chua said.
Philexport blamed the high power rates for the low export growth this year.
"The cost of doing business has escalated, driven up by power rates," Philexport executive vice president Aninao Bagaboldo said.
TUCP Representative Raymond Mendoza noted "a convergence of interests” as “businesses (and) laborers are really hurting.”
“Dapat i-push ang another round ng (wage) increases (We need to push another round of wage increases,” he said.
The groups also recommended the creation of a single power purchaser that will purchase power from the cheapest supplier and sell this to distribution utilities like Meralco.
They also called for a review of the EPIRA and the design of the wholesale electricity spot market.
Meanwhile, the non-government Freedom from Debt Coaltion said on Friday that it had finally got the attention of ERC after 10 years of advocating against the privatization of the power industry.

However, the FDC said in a statement that the regulatory body had allowed only six officers of the advocacy group to participate in a dialog held at the former’s office in Ortigas Center, prompting around 80 leaders of various community-based organizations to stage a picket-protest outside the venue.

Milo Tanchuling, FDC secretary-general, said that they sought feedback from ERC Commissioners on the seven-page proposed measures, titled “Declaration of Unities and Action Points,” to address problems besetting the electric power industry which the Coalition submitted to the regulatory body weeks ago.

The declaration was an output of the FDC-sponsored “National Power Summit” held last June 25-26 in Quezon City.
It contains a long list of proposals on the following: renewable energy; debts of the National Power Corporation; how to reduce power rates; making power industry more efficient, reliable and secure; regulation; and, women under power privatization and the regime of Electric Power Industry Reform Act of 2001 (EPIRA).

Tanchuling said that FDC focused on four major points that would lower electricity rates and empower the consumers during the dialog.

“We urged the ERC Commissioners to stop the indexation of or pegging the prices of natural gas and geothermal steam to the international prices of oil and coal, respectively," said Tanchuling.
"This indexation makes the prices of electricity generated using natural gas and geothermal steam become higher, not to mention becoming vulnerable to price fluctuations in the world market for oil and coal” he added.

FDC also urged ERC to stop the incorrect implementation of ERC’s performance-based rate (PBR) methodology. The ERC’s PBR method allows power firms to increase rates in anticipation of future expansion and other capital expenditures.

“We believe that the ERC’s version of PBR methodology is unfair and unjust to consumers. Instead of increasing the efficiency and lowering the tariffs that commonly followed the implementation of PBR in other countries; those of local distribution and transmission utilities have been increasing at an average of 63 percent and 40 percent, respectively, in the Meralco franchise area,” said Tanchuling.

According to FDC, the fatal flaws of the ERC PBR include: failure to determine and benchmark the utilities’ cost to the cost of an efficient utility; absence of real efficiency targets; and, absence of real performance standards. 

“If ERC cannot implement PBR correctly, then it would be better to revert to the much simpler Return on Rate base methodology,” Tanchuling said.

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