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CALLING
it part of government efforts to lower the cost of
electricity and provide users some relief, the Cabinet
has approved the proposal to allow major electricity
users like malls, factories and five-star hotels to
directly source their power requirements from
independent power producers (IPPs), according to the
National Economic and Development Authority (Neda).
Neda
Acting Director General Augusto Santos said Wednesday
that electricity consumers, mostly industrial and
commercial consumers, who use up at least 1 megawatt
(MW) of power during peak hours can deal directly with
IPPs.
Santos
said the interim open-access scheme, which will be
proposed by the IPPs to the Energy Regulatory Commission
(ERC), removes distribution and system-loss charges
being charged by power-distribution companies in the
country like the Manila Electric Co. (Meralco), which
this week was grilled in Congress on the various costs
it had passed on to consumers. Meralco officials had
said the government was more to blame for the rising
electricity bills because of various impositions, such
as value-added taxes even on the system losses and
royalties on indigenously produced natural gas.
As
Santos briefed reporters, Party-list Rep. Teodoro Casiño
of Bayan Muna and Kabalikat ng Malayang Pilipino Rep.
Luis Villafuerte were making separate moves. They said
Meralco’s own electric consumption passed on to
consumers as system loss, has no legal basis as the
implementing rules and regulations (IRR)—used as the
basis for the additional electric bill charge—was not
provided for in Republic Act (RA) 7832, which, in turn,
was the basis used for the said IRR. They will question
this before regulators on Friday.
On
Wednesday afternoon’s hearing of the House energy
committee, Casiño also questioned representatives from
Meralco and the Energy Regulatory Commission (ERC) on
the legal and moral basis for the take-or-pay provisions
in energy supply contracts, which assure independent
power producers (IPPs) of payment for total generation
capacity even without actual delivery of power.
“RA 7832
is an antipilferage law which seeks to provide recovery
for distribution utilities for power lost in
transmission and pilferages and as such, it does not
include recovery for the electric consumption of
distribution utilities including Meralco. “Thus, it is
illegal for Meralco to pass on to electric consumers the
cost of its own electric consumption,” Villafuerte told
reporters.
For his
part, Casiño said that with the implementation of RA
7832 in 1995, the amount up for refund would reach
billions of pesos.
Villafuerte said he would be joining Casiño in filing
the petition.
Meanwhile, despite the policy approval for interim open
access by the Cabinet, Neda’s Santos said such will
still be subject to the final approval of the ERC.
“In the
desire of the government to lower electricity costs, the
Cabinet approved an interim open-access scheme where
consumers, with an average peak demand of at least 1
megawatt (MW), can connect directly to power-generation
firms,” Santos told reporters.
The
interim open-access scheme,
Santos
said, is a stop-gap measure to allow consumers to
directly deal with IPPs even if the government has yet
to privatize majority of its power-generation assets.
According to the Electric Power Industry Reform Act, the
government can only implement an open-access system if
it has already privatized 70 percent of its
power-generation assets.
Santos
said the Power Sector Assets and Liabilities Management
Corp. projects that if the sale of the Tiwi-Macban
Geothermal plant in Albay and the Palinpinon geothermal
plant in Negros Oriental pushes through this year, the
government will overshoot the 70-percent target by
December.
Meanwhile, Santos said the interim open-access scheme,
to be proposed by the IPPs to the ERC, remove
distribution and system-loss charges being charged by
power distribution companies in the country like Meralco,
which supplies electricity to the whole of Metro Manila.
He said distribution charges account for 10 percent to
20 percent of a consumer’s bill; and system-loss
charges, based on Meralco data, account for 9.5 percent
of electricity cost.
“If this
measure will not remove these charges entirely, it will
significantly reduce electricity costs,”
Santos
said.
With
lower electricity costs,
Santos
said consumers could expect that the cost of the goods
sold by these industrial and commercial users will also
go down.
At the
House energy committee hearing, Casiño questioned
Meralco and the ERC on the take-or-pay provisions in
energy supply contracts, citing the case of First Gas,
to which Meralco paid the amount equivalent to 1,000 MW
of electricity even if it generated only a total of 300
MW. Meralco, in turn, passed on the additional cost to
its consumers.
“What is
the basis for the take-or-pay provisions in the IPP
supply contracts? This provision in the IPP supply
contracts makes their businesses virtually risk-free,”
Casiño said.
But
Meralco president Jesus Francisco said the provision was
introduced in the IPP supply contracts during the time
of former President Fidel Ramos at a time when the
country was experiencing a crisis in power to encourage
investors to put up power plants.
The
take-or-pay provision however, according to Francisco,
would not have posed a problem if the government made an
accurate projection of the country’s power requirement.
“With a
wrong projection of the country’s power requirement made
by Neda, we now have an oversupply of electricity which
we, in accordance with the provision of the supply
contracts, have to pay whether there is actual
consumption or not,” said Francisco. |
