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One
cannot help but suspect that the Wholesale Electricity
Spot Market (Wesm) as provided for in the Electric Power
Industry Reform Act (Epira), was designed to fail
because of price manipulations traceable to the National
Power Corp. (Napocor), the state firm that controls more
than 80 percent of the country’s total generating
capacity.
This
must be the reason Napocor is considered by many as one
of the most inefficient and most corrupt government
agencies hereabouts.
What
appears to be more condemnable, however, is the gall of
people in the government to kill the Epira itself so
that Napocor would continue to live in gay abandon and
persist with their merry ways, to the detriment of the
consuming public, and so that Wesm shall now become a
thing of the past.
The
Epira was enacted in 2001, but it took the government to
operate Wesm only in June 2006, and now the government
only wants to effectively abolish the Epira by
postponing forever the privatization of Napocor.
Wesm is
supposed to serve as a clearing-house to reflect the
economic value of electricity for a particular period
and “pool” all electricity output from generators to
make it centrally coordinated, but what is happening is
that it has become a Napocor tool to further increase
power prices, for reasons easy to understand, it being
the dominant player.
Being
questioned is the sudden electricity-price fluctuation
that started when Wesm was put in place in June 2006. In
that year, the Power Sector Assets and Liabilities
Management Corp. (Psalm) lost P9 billion.
Knowledgeable sources recall that in the first trading
month in June, biddings resulted in an average price of
P2.72 per kilowatt-hour (kWh). On the second month it
rose again, and on the third month, electricity price at
Wesm was pegged at P4.853 per kWh, which is unreasonably
high.
The
Energy Regulatory Commission (ERC) last week upheld its
earlier decision to peg to the Napocor’s time-of-use
rate the Wesm prices during some “questionable” months
in 2006, effectively preventing the collection of some
P9 billion from power users.
The P9
billion that Psalm wants represents the difference
between the actual payments for energy traded in the
third and fourth billing months (close to P6.7 billion)
and the amount due Psalm based on the market clearing
prices (P13.8 billion), plus the corresponding
value-added tax (almost P1.2 billion) and interest based
on Napocor’s nonprime lending rate (P606.4 million).
As
expected, being just another government agency, the ERC
cleared Psalm of any wrongdoing in the price
manipulation. Further, the ERC found Napocor responsible
for price-fixing but did nothing to penalize its
officials.
According to the ERC, it was Cyril del Callar, Napocor
president, who urged Psalm to “adopt certain
recommendations that ultimately affect how the Psalm
trading teams [would] submit their offers in the
market.”
Del
Callar’s behavior, according to the ERC, is “highly
inappropriate and irregular,” adding that Napocor’s
proposal “may, in fact, be taken as invitation to
collaborate so as to vary market results.”
It is no
secret, said the ERC, that the dominant position of
Psalm can enable it to “easily dictate the prices in the
Wesm.”
Market
participants, particularly Napocor, should refrain from
making such recommendations to Psalm that may have an
impact on the market conditions,” the ERC warned.
However,
such warnings are useless unless the perpetrators are
taken to court and hailed to jail.
Also,
take note of the following observations:
• Early
this month or next, electric consumers may be charged an
additional P1 to P2 per kWh.
•
Government-owned power generators are just seeking the
go-signal of the ERC for them to collect P9 billion for
electricity sold in September and October 2006. The
power producers want to collect the huge amount from
consumers despite the fact that regulators had
discovered that they manipulated prices.
• “In
spite of the fact that they [Napocor officials] were
caught dictating and manipulating prices, they want to
be allowed to collect P9 billion. This would translate
into an increase of P2 per kWh in the consumers’ monthly
bills.”
• Former
Psalm president Nieves Osorio resigned in disgust over
the fiasco. It can be recalled that Osorio received
several letters from Napocor president del Callar
detailing how they can retake the losses Napocor and
Psalm lost in the first month of trading at Wesm.
•
Regulators found that state-owned power generators,
which control production and can, therefore, influence
pricing, were involved in the irregularity, but no
sanctions were imposed against them.
• It is
indeed unsettling to imagine the extent of havoc Napocor
can wreak upon the Philippine electrical-power sector
with sustained impunity once it succeeds in its
unrelenting effort to maintain its dominant market
position. So far, Napocor has been resorting to all
sorts of maneuvers, legal and otherwise, to delay the
privatization of its power-generation assets.
According to the ERC order of June 6, 2007, Napocor
officials, led by del Callar, were behind the price
manipulation. In its order, the ERC said del Callar, two
years ago, wrote letters to Psalm recommending the
adoption of certain policies that would amount to the
price fixing if carried out.
ERC
Chairman Albano was also quoted as saying that while the
subject of their investigation was the alleged price
fixing of Psalm, it may set another probe for Napocor in
the light of del Callar’s “highly inappropriate and
irregular” letters.
E-mail: raulbvalino@yahoo.com.ph. |
