The new owners of generation assets formerly owned by the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (Psalm) must be given the flexibility to choose where to source their fuel requirements.

The Joint Foreign Chambers of the Philippines (JFC) made this call in an open letter to Jose C. Ibazeta, Psalm president and chief executive.

The group said procurement of fuel by Napocor both for the plants it owns and for the plants it is contractually obligated to provide for should be driven by market forces. “If it cannot be done, Napocor should hire a reputable fuel consultant who will recommend and implement a transparent fuel procurement strategy for all of the plants [it] is currently supplying with fuel. It is exceedingly clear that, as a country, the Philippines must have short-term or spot-market strategy, a medium-term [goal], and ultimately a long-term [scheme] for the procurement of fuel in order to optimize the impact of rising fuel costs on energy prices.”

The open letter, signed by the seven presidents representing the foreign chambers in the country, also noted that the continuation of the current practice adds unnecessarily to the cost of power and harms national competitiveness and efficiency.

Ernesto Pantangco, president of Philippine Independent Power Producers Association (Pippa), earlier said that interim open access will not immediately bring down rates. “With our proposal for interim open access, contestable customers of 1-megawatt [MW] and above requirement will now have a third option—which is to contract directly with suppliers beyond the distribution utility and electric cooperatives,” said Pantangco.

He added that if a consumer should choose between the special ecozone rate of P3.27 per kilowatt-hour (kWh) offered by Manila Electric Co. (Meralco), and a hydro offers P3/kWh, obviously that consumer will shift to the hydro-power plant. “Let competition, market and consumers decide. If power is so crucial to the consumers’ operation, and as long as they’re willing to pay for premiums, then so be it,” he added.

Pantangco pointed out that all generation companies, including newly privatized Napocor assets, will be allowed to compete.

“This means Psalm and Napocor cannot compete since they’re over the cap, and that’s what we mean by level playing field. The Electric Power Industry Reform Act (Epira) was meant and crafted for everybody to have a level playing field. We don’t want to compete with the government,” he said.

Pantangco said they had proposed that the threshold or demand requirement of one MW be reduced to 750 kilowatts (kW) six months after implementation of the interim open access.

“With the way Epira works, the threshold being reduced to 750 kW until it eventually reaches the households will be determined by the Energy Regulation Commission (ERC). So eventually it will reach the household but that will be up to the ERC to determine.”

After one ERC hearing, Pantangco said interim open access could begin on June 23 at the earliest or end of June at the latest based on their reading of the commission chairman, Rodolfo Albano Jr.’s, statements.

Pantangco added that they hope open access would encourage new investments and attract transferred industries back.

“One thing we’d like to emphasize with this proposal, there’s no more need to amend [Epira], since you have already achieved its objectives which is to bring forth open access.”

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The new owners of generation assets formerly owned by the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (Psalm) must be given the flexibility to choose where to source their fuel requirements.

A FRIEND had this horror story to tell. It started with his e-mail address, which was obviously hijacked. At any rate, the mailing list of this friend received a standard message asking for help. It seemed a friend was currently on a work-related trip to the United Kingdom.