What really ails the power industry
Saturday, February 18, 2006
By Pete Ilagan
DOOMSAYING and public badgering by so-called investment consultants to stampede government into a firesale of National Power Corp.’s generation assets that have cost captive customers an arm and a leg under the obnoxious purchased power cost adjustment, or PPA, are alarming. It diverts public attention from what ails the power industry.
The government’s failure to open up Meralco’s stranglehold on the electricity market—70 percent of Luzon, 60 percent nationwide—is the disincentive to new players bidding for Napocor power plants. Where will the more efficient producers sell their power, in a market where the monopoly distributor (Meralco) is willing to pay a higher generation rate to a sister company (First Generation), despite cheap and excessive power being available (from Napocor)?
If we are to fix the power industry, that is where we should start: to make sure that the efficient plants are dispatched first, and the captive customers pay only for the least cost supply available in the market.
Confusion in the industry is not helped at all by an ill-disguised power-grab by the proponents and sponsors of EO 474 creating a Philippine Strategic, Oil, Gas, Energy Resources and Power Infrastructure Office, or Psogerpio, supposedly in anticipation of a looming power crisis and to attract investors in a Napocor firesale.
Before we think of reinventing the wheel and creating new offices with kilometric names but vague and shortsighted mandates, let us make sure that the present consumer safeguards work. We need a third-wheel in power like we need to pay for electricity we did not even consume.
Incidentally, the market reception of the First-Generation IPO, which fell far short of its twice-scaled-down valuation, was reportedly cold because of the delayed privatization of Napocor assets. If true, then there is indeed poetic justice.
Finally, before government puts those power plants on the auction block, they should first determine consumer equity in them from our PPA charges. For all we know, consumers may already own those assets in light of Napocor’s mere 5-percent equity. And under open access or an open market, we could supply ourselves with our own cheap power.
Pete L. Ilagan is the president of the National Association of Electricity Consumers for Reforms, or Nasecore, No. 10 Bayside Court Compound, 680 Quirino Avenue, Tambo, Parañaque City, 1700 Philippines.
posted by philpower @ 9:57 AM,
