|
WITH
prices of basic commodities and utilities skyrocketing,
the consumer-and-debt watchdog Freedom from Debt
Coalition (FDC) has laid the blame on a range of
factors, saying bad governance to corruption to
mismanagement to rent-seeking to framework concerns have
caused power rates in the country to remain high.
The FDC
thus stressed these problems cannot be resolved fully
without transforming the electricity industry into one
“that is more responsive and accountable to the people,
and more environmentally sustainable.”
It is
set to present a paper to Congress probers on high power
rates, listing “10 reasons why electricity bills are
high.”
For one,
the FDC said the Energy Regulatory Commission (ERC)
allows the Manila Electric Co. (Meralco), other
distribution utilities (DUs) and the National
Transmission Corp. (Transco) to earn over and above what
used to be the statutory return on rate base of 8
percent to 12 percent.
It also
noted that the Arroyo government wants to attract
private investors to purchase National Power Corp.’s (Napocor)
assets, and for the assets to become attractive,
electricity rates have to be high. “The higher the
winning bidder bids, the higher the electricity price we
have to pay in the future so the winning bidder can
recover its investment.”
The FDC
also alleged that the government did not renegotiate the
contracts with Napocor’s independent power producers, or
IPPs, and that these contracts require Napocor to
purchase electricity whether or not these are actually
generated or dispatched, and to supply fuel to IPPs that
are in operation.
The
price Napocor agreed to pay for this electricity was
overstated to begin with, and many of these contracts
have clauses that allow the IPP to raise rates over
time. Napocor also bears the risk of peso devaluation
and the risk of the cost of fuel, such as oil and coal,
going up, said the FDC.
“We have
been paying for these contracts in our electric bills
for over a decade, and we continue to pay for these
today, although this is less transparent, thanks to
unbundling. With world oil and coal prices hitting
all-time highs, with the peso now at P40 to the dollar
compared with P26 to a dollar when these contracts were
signed, the cost of these contracts are an excessive
burden on ordinary Filipino electricity consumers,” said
FDC, adding that even consumers that do not have
electricity at home are also made to pay for these
contracts because the government guarantees all of
Napocor’s obligations to the IPPs.
The FDC
also stressed that Napocor rates, on the other hand, are
generally cheaper owing to the P0.30 per kilowatt-hour
mandated reduction required by the Electric Power
Industry Reform Act (Epira) for electricity generated by
Napocor or its IPPs.
The FDC
also pinned the blame for high electricity prices to a
number of ERC decisions, among others, one dismissing
the market-abuse case against the Power Sector Assets
and Liabilities Management Corp. alleged by the
Philippine Electricity Market Corp., the operator of the
Wholesale Electricity Spot Market.
Following the logic of privatization and market reforms,
the Epira states that instruments such as
cross-subsidies that distort the “real” price of
electricity should be removed, according to the FDC.
“This is
in keeping with the transformation of electricity
industry from a public service industry to a commodity
market,” said the FDC, adding that the prices should be
subjected to market rules alone—and considerations such
as equity and justice in the provision of electricity
should be abolished.
FDC
said households no longer enjoy subsidies from the
industrial and commercial sectors, and households in
Mindanao and Visayas are no longer being subsidized by
households in
Luzon,
and such households that enjoyed subsidies in pre-EPIRA
days have experienced a hike in rates as a result of the
removal of these subsidies.
Moreover, corruption in Napocor— including allegations
of “overpricing” in the process of buying coal and oil
supply for Napocor-owned power plants and Napocor-IPPs—artificially
inflates generation charges, said FDC. |
