P-Noy urged to address power rate hikes

By Mike Frialde (The Philippine Star) Updated September 24, 2011 12:00 AM

MANILA, Philippines - Labor, academe and industry groups yesterday urged President Aquino to prioritize the issue of escalating power rate increases.

The groups led by the Philippine Chamber of Commerce and Industry (PCCI) met in Makati City and signed a joint statement urging the President to craft a roadmap towards power rate competitiveness and supply stability.

“There appears to be no specific and strong action program or roadmap coming from the executive department and made known and shared with the private sector,” they said in their joint statement.

Joining the PCCI in its call are the Philippine Exporters Confederation (PEC), the Philippine Steelmakers Association (PSA), the Foundation for Economic Freedom (FEF) and the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP).

The groups also called for the scrapping of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA), which they said was not able to meet its promised results since its enactment on June 8, 2001.

“All attempts of revising or amending the EPIRA over the last 10 years have not succeeded because of the interplay of its internal weakness and the lobby of conflicting interests among stakeholders,” the groups said.

They said the data from the International Energy Council showed that in 2009, the country’s industrial electricity rate of $13.2 was highest not only in the region but also higher than the Netherlands, the US, Australia, France and Sweden.

Ranking higher than the Philippines at that time were Italy, Germany, Singapore and the United Kingdom.

“This situation has definitely not improved,” the groups said.

They also warned that if the executive does not take action to control the escalating power rate, the country could experience “energy poverty” and trigger an eventual call for wage increase.

“(This) is the result of taking away food from the table of the poor and labor on account of power cost,” they said.

To curb power rate escalation, the multi-sectoral group proposed that the executive department direct the Energy Regulatory Commission (ERC) to stop or defer from hearing any petition for a power rate increase.

The group also called on the President to conduct a “strip and build” analysis of the country’s power cost and decide how to bring it to a competitive level by eliminating certain cost burdens.

The group also suggested that government defer the implementation of any high-cost renewable energy project such as those using solar, wind and ocean power and instead focus on cheaper alternatives such as biomass and river hydroelectric sources.

Meanwhile, the ALU-TUCP has warned of a possible large-scale workers’ protest for higher wages should the President fail to respond quickly to the issue of rising electricity costs.

“As we speak today, 11percent of the total monthly income of toiling Filipino workers goes to their electricity bills. The increasing electricity costs are eating away the family budget for food, medicine, decent shelter, and education for their children. This is compounded by the inflating daily wage amount caused by rising costs of basic services and commodities,” said Gerard Seno, ALU-TUCP national vice president.

“If these issues are not acted upon soon, workers will be forced to demand for higher wages or demand answers on the streets. This is a very serious issue for workers that must be responded to amid these very difficult times. The time for President Aquino to act is now,” he added.

FDC hits ERC

Meanwhile, Freedom from Debt Coalition (FDC) secretary-general Milo Tanchuling asked the ERC yesterday to stop the “indexation” or pegging of the prices of natural gas and geothermal steam to the international prices of oil and coal, respectively.

“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,” Tanchuling said.

For the last 10 years, the FDC had been opposing the privatization of the power industry and has been pushing for stronger industry regulation and campaigning against high electricity rates.

The FDC is a national coalition of more than 200 non-government and people’s organizations advocating people-centered economic development.

Tanchuling also sought feedback on the seven-page proposal entitled “Declaration of Unities and Action Points” that the FDC submitted to the ERC two weeks ago to address the problems besetting the electric power industry.

The declaration was the output of the FDC-sponsored “National Power Summit” held last June 25-26 in Quezon City which contains a long list of proposals on renewable energy; debts of the National Power Corp.; reduction of power rates; making power industry more efficient, reliable and secure; regulation; and women under power privatization and the regime of EPIRA.

“We believe that the ERC’s version of performance-based rate methodology is unfair and unjust to consumers. Instead of increasing the efficiency and lowering the tariffs that commonly follow the implementation of performance-based rate 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,” Tanchuling said.

He said aside from its traditional rate and service regulation functions, one of the two primary responsibilities of ERC is to ensure consumer education and protection. – Jose Rodel Clapano

http://www.philstar.com/Article.aspx?articleId=730352&publicationSubCategoryId=63

Business groups hit energy policy

Businesses seek govt power sector road map

Published : Saturday, September 24, 2011 00:00

Article Views : 562

Businesses seek govt power sector road map

Written by : KRISTA ANGELA M. MONTEALEGRE

BUSINESS and labor groups want the Philippine government to come up with a national road map to achieve electricity supply stability and bring down what are the highest power rates in Asia. In a briefing, Francis Chua, president of the Philippine Chamber of Commerce and Industry (PCCI), said the government lacks a specific and strong action program to address the concerns, which have been hurting exporters, manufacturers and metal producers.”The public would like to know the road map so we can support it and so we can figure out how we can add value to the road map,” said Chua. Data from the Department of Energy showed that Filipinos are paying $0.24 per kilowatt hour in contrast to Thailand’s $0.08 and Malaysia’s $0.07 Among the proposals of PCCI, Philippine Exporters Confederation, Philippine Steelmakers Association, Trade Union Congress of the Philippines (TUCP) and Foundation for Economic Freedom is the creation of a single power purchaser that will resell to utilities at a nominal mark-up of at least P0.02 per kilowatt-hour. The groups are also calling for a review of the wholesale electricity spot market design to restrain generation charge increases, such as applying the net pool or balancing market system in the dispatching protocol instead of the current gross price basis. TUCP called for the reclassification of generation companies as public utilities, adding these entities must be subjected to return-on-rate base ceilings of 12 percent in their computation of net income. The labor group denounced the performance-based rate formula of the Energy Regulatory Commission. The PBR allows a distribution utility or electric cooperative to file a petition for a rate hike after meeting certain performance criteria such as good management practices and efficient systems and operations. While the PCCI strongly supports renewable energy, it is objecting to the imposition of feed-in-tariffs and instead pushed for allocation of renewable energy directly to households. High prices have already taken their toll on the country’s exports, putting its overall export targets in peril, said Aniano Bagabaldo, Philexport executive vice president and chief operating officer. Under its plan, Philexport projected a bold target of doubling exports from $52 billion to $120 billion by 2016, basing its trajectory on stable power supply and competitive rates. Bagabaldo warned that when power rates get too prohibitive, micro, small and medium enterprises, which make up 98 of every 100 Philexport members, may no longer be viable because electricity accounts for up to 30 percent of their monthly operating costs. Realizing the 10-percent export growth target of the Export Development Council may be “extremely hard” for its members, Bagabaldo said, after actual exports grew by only 3.3 percent in the first seven months compared with the 26-percent growth in the same period last year. The steelmakers group said they have been carrying the heavy burden of high power costs, forcing them to directly connect with independent power producers, to import products in lieu of local production, or to put up their own power plants. “It is not enough to say that our neighbors pay less for power, but what is important is that their governments acknowledge the strategic importance of the power sector and hence provide what is necessary to ensure that the rates are competitive and the supplies are sufficient,” said David Chua, PSA president.

Mataas na singil sa kuryente sa bansa, iprinotesta ng mga negosyante at manggagawa

Posted: 7:44 PM  09/23/2011

Nagsanib-pwersa ang mga negosyante, academe at manggagawa para kalampagin ang gobyerno sa mataas na singil sa kuryente.

Sa joint statement ng mga negosyante, Trade Union Congress of the Philippines (TUCP) at Foundation for Economic Freedom (FEF).

Kulang daw sa aksyon at direksyon ang gobyerno kung paano solusyunan ang mahal na singil sa kuryente. Ayon kay David Chua, pangulo ng Philippine Steelmakers Association, kailangan nang pababain ang singil sa kuryente. Sinabi naman ni Francis Chua, pangulo ng Philippine Chamber of Commerce and Industry (PCCI), huwag nang itaas pa ang kasalukuyang power rate na pinakamahal na sa Asya. Babala naman ng TUCP, hihirit sila ng umento sa sweldo kapag tumaas pa ang singil sa kuryente. Inihayag ni TUCP Partylist Representative Raymond Democrito Mendoza na hindi lang negosyo ang apektado kundi pati ordinaryong manggagawa dahil P1,200 hanggang P1,400 ang nakakaltas sa kanilang sweldo para ipambayad sa kuryente. Pero depensa ng Department of Energy (DOE), inaayos na nilang dumami pa ang mga planta para lumakas ang suplay, wala nga lang silang kontrol sa presyuhan ng kuryente. Report from Alvin Elchico, ABS-CBN News

http://www.dzmm.com.ph/tabid/82/Article/17556/Mataas-na-singil-sa-kuryente-sa-bansa-iprinotesta-ng-mga-negosyante-at-manggagawa.aspx

Aquino pressed for roadmap vs power rate hike

By: Matikas Santos
INQUIRER.net6:04 pm | Friday, September 23rd, 2011


MANILA, Philippines – Major players from key industries in the Philippines have rallied together calling on President Benigno Aquino III to lay down a roadmap that will stem the rising cost of electricity in the country.

Officials from the Philippine Exporters Confederation (PEC), the Philippine Chamber of Commerce and Industry (PCCI), the Philippine Steelmakers Association (PSA), the Foundation for Economic Freedom (FEF), UP National Engineering Center, the Trade Union Congress Party (TUCP), and the Associated Labor Unions-TUCP, said in a joint statement that “there appears to be no specific and strong action program or roadmap coming from the Executive department.”

“We ask the Aquino administration to bring power rates down,” said TUCP partylist Representative Raymond Democrito C. Mendoza.

Attorney Aniano Bagabaldo, external vice president and chief operating officer of  PEC, said “We have the highest power rates in Asia” and cited figures from the Department of Energy (DoE) stating that energy rates in the Philippines were 24 cents per kilowatt hour in contrast to Thailand and Malaysia, which have eight and seven cents per kilowatt hour respectively.

This has led to the high cost of doing business in the Philippines and has also been “the biggest disincentive to the entry of new foreign direct investors to our shores” he added.

Gerard R. Seno of the Associated Labor Unions called on President Aquino to “make the necessary bold policy interventions” to “confront this potentially worsening problem affecting millions of workers.”

Among the proposals they have put forward was for President Aquino to suspend and review all pending power rate increase petitions in the Energy Regulatory Commission (ERC).

They are also calling for drastic changes in the ERC saying that it has “failed to protect the interest of ordinary workers and consumers against the greed of powerful industry players” when it implemented a “Performance-Based Rate” (PBR) formula.

The PBR allows electricity distributors to file a petition to increase prices when it meets certain performance criteria such as faster line collections and quick response to client’s problems, among others. This makes it relatively easy for them to raise prices for their good performance, when they are required to perform good in the first place anyway, they said.

TUCP Representative Mendoza recommended the scrapping of the PBR and to revert to the Return-on-Rate-Base (RORB) which limits the electricity distributor’s returns to 12%.

The members of the conference also recommended that some high-cost renewable energy programs such as solar, wind, and ocean be deferred and instead focus on cheaper ones such as biomass, geothermal and hydro. Some renewable energy sources costs high because the technology is still new and expensive to produce they said.

Energy Chairman of PCCI, Jose Alejandro said, “We are the highest in the world” when it comes to renewable energy production. Currently 34% of our energy production comes from renewable energy.”

Other recommendations are the review of the Wholesale Electricity Spot Market (WESM) to restrain generation charge increase.

http://business.inquirer.net/20959/aquino-pressed-for-roadmap-vs-power-rate-hike

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

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

(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.

http://interaksyon.com/article/13692/business-labor-cause-oriented-groups-balk-at-high-power-costs

Business, labor groups want roadmap to bring down power costs

by Alvin Elchico, ABS-CBN News
Posted at 09/23/2011 6:24 PM | Updated as of 09/23/2011 6:24 PM


MANILA, Philippines - Business, labor and academe groups have called on the Aquino government to come up with a roadmap to address the high cost of electricity in the country.

Officials of the Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation, Trade Union Congress of the Philippines (TUCP), Foundation for Economic Freedom, the UP National Engineering Center and the Philippine Steelmakers Association said that power rates in the Philippines are now among the highest in the world.

They noted that the government has no specific or strong action program to address the problem.

They also warned that the continued increase in power rates might result in energy poverty, wherein poor households can no longer afford basic energy services to put food on the table.

The TUCP, for its part, claimed high electricity costs could even trigger another round of wage hike.

The groups are asking the government to stop or defer any rate hike petition pending before the Energy Regulatory Commission (ERC), including the one by the Power Sector Assets and Liabilities Management Corp., which seeks to recover the stranded debts and costs of National Power Corp.

They are also calling for the creation of a single power purchaser that will buy power from the cheapest supplier and auction this to distribution utilities like Manila Electric Co.

The groups want a review of the performance-based rate (PBR) setting scheme, a method that guarantees firms return on future investments.

They also want the government to defer development of high cost renewable energy like solar, wind and ocean, and focus on cheaper ones like biomass and run-of-the-river hydro.

Lastly, the groups asked leaders of the departments of energy and finance, the ERC and the Joint Congressional Power Commission to work together and address high power rates with a sense of urgency.

http://www.abs-cbnnews.com/business/09/23/11/business-labor-groups-want-roadmap-bring-down-power-costs

Renewable energy law may be revised

By Coco Alcuaz, ANC

Posted at 09/06/2011 11:00 AM | Updated as of 09/06/2011 4:21 PM

MANILA, Philippines - Energy Secretary Rene Almendras said it is possible that President Aquino will move to revise the Renewable Energy Act, which is drawing attention now that regulators are posed to raise rates to support it.

The Energy Regulatory Commission is currently holding hearings to decide how much all power users will have to pay to subsidize the development of wind, solar, hyro and biomass. Proponents say the subsidy is needed if the Philippines wants to be less dependent on oil whose prices are bound to rise.

Critics say many renewable sources are expensive but becoming cheaper fast so it is better to wait.
On ANC's  "A Sustainable Future: A Forum on Renewable Energy" on Monday, Almendras said the President is looking for a balance between present prices and future energy independence.

"The President does care about the environment, does care about the future and the president is not afraid to make difficult decisions, unpopular decisions. But he also realizes that he has a role for the present generation. That's why he keeps saying there has to be that balance," Almendras said.

The Energy Secretary also added that the President may move to revise the Renewable Energy Act if it does not work out.

"I don't think that's an impossibility. A few months ago the DOE requested the World Bank to bring in some experts and review the law. Clearly they have identified areas that could be improved," Almendras said.

The Philippines already has one of the highest industrial power rates in Asia, turning off investors from setting up their business in the country.

Trade Secretary Gregory Domingo said higher electricity prices that will come with renewable energy subsidies is making things worse.

`As it is now it (high electricity prices) is a big deterrent. That's why were locked out of heavy industries, for example. Any industry now that uses a lot of power is discouraged from investing in the Philippines. We are in effect losing millions of jobs by having a very high power cost. So the trend to power cost should be going downward, not upward," Domingo said, in the same forum.

But Dennis Ibarra, president of Philippine Solar Power Alliance, said there is a need to pay now not just as a hedge against higher oil prices but also to take care of the environment.

"You have to believe the environment and what's good for the future generation has to be taken care of now. And not have more fossil fuel plants to be built. The time for solar is now," said Ibarra, whose company is proposing to build solar power facilities.

Former Senator Juan Miguel Zubiri, one of the authors of the Renewable Energy Act of 2008, said that while the subsidy will raise rates and turn off investors in general, it will attract investment in renewable energy itself.

"The ten centavos that is going to be charged three years from now to the consumer will actually be by the billions of investments in dollars coming to the phils and we're going to lessen our dependence on fossil fuel," Zubiri said.

http://www.abs-cbnnews.com/business/09/06/11/renewable-energy-law-may-be-revised

DoE to auction RE targets

By MYRNA M. VELASCO

August 15, 2011, 12:38am

MANILA, Philippines — Department of Energy (DoE) Secretary Rene D. Almendras has announced they are going to bid out the 760 megawatt initial renewable energy (RE) installation targets, foiling assumptions by developers that they have been accommodated.

The policy was clearly laid down by Almendras when he said that no one was “in” yet and that the process of project selection shall be done through a bidding.

Industry talks circulated that the RE developers have been allowed to allocate among themselves which of their proposed capacities should be in the installation targets across technologies, but Almendras qualified that “there is no agreement of such and we are not involved in any agreement with developers.”

The energy chief set on record that that Joint Congressional Power Commission (JCPC) “insists that a bidding process be done. We will wait for their directions.”

If a “no bidding policy” will be established as a system in the allocation of the RE installations, the DoE and the energy secretary have been cautioned that they could be held legally liable for that, because primarily, the government would not be able to get the best deals or it may end up with carpetbagging project developers with no track records in power project developments – and that would be to the disadvantage of the Filipino consumers.

Additionally, the feed-in-tariff (FIT) charges to be passed on in the electric bills take the form of “guarantee” for the RE projects, hence, the award of the installations must go through “biddings” as is the usual course for government-led investment undertakings.

The auction process could also be a perfect venue for DoE to re-evaluate prospects on how RE costs would eventually go down. When a system is established, the FITs can just be held as a ceiling for the pass-on subsidies as some developers may come up with proposals having lower costs.

In the meantime, the energy department disclosed that “internal meetings” will be held so they can start “laying out the eligibility criteria and then agree on a process for the bidding.”

Almendras similarly pointed out that the RE developers cannot avail of FITs across various technologies. For instance, if one project developer would want to pursue projects in wind, solar, hydro and biomass, it would just have to choose in which technology it would want to avail of the FIT.

“It cannot be allowed that there would be one group benefitting from FIT for all technologies. So if (a developer) wants to get FIT for wind, it would just be for wind. It would no longer be eligible for FIT in the other technology installations,” the energy chief explained.

The very intense lobby of the RE developers became even more evident the past weeks, with some groups counting themselves in the installations already going all-out with their press releases and full-page advertisements to add pressure to the immediate approval of the FIT charges.

Almendras reiterated that he will push for RE developments and their integration into the country’s energy mix, yet he qualified that this must be paced prudently because of cost implications of some technologies and also on their impact in the country’s power system.

http://www3.mb.com.ph/articles/330701/doe-auction-re-targets