Firms seek rules on new power scheme
Friday, April 07, 2006
A GROUP of large power users yesterday welcomed the news of Manila Electric Co.'s declaration of partial open access, but withheld its decision on whether to stick with Meralco or find other power suppliers until after the rules for the new scheme shall have been finalized.
Meralco has agreed to allow other power producers to supply the electricity needs of its large customers, ending its monopoly in Metro Manila and nearby cities and provinces. The move is perceived as something that would reduce the electricity bills of large power users.
Donald Dee, president of the Philippine Chamber of Commerce and Industry, said that companies would need to know how much Meralco would charge for the use of its lines in case the companies decided to source their power requirement from other firms.
"We welcome the news, but we need to know the details. While we can access (National Power Corp. or other independent power producers), we don't know what the tolling fees will be. At the end of the day, we need to know the total cost to us," Dee said in a telephone interview.
Electricity from Napocor or IPPs pass through the lines of National Transmission Corp. (Transco) and the Meralco network before they reach end-users.
Dee said it would not be enough to just find an IPP that charged a lower generation rate because companies also had to consider transmission charges and distribution wheeling rates.
"We've been asking for open access all along. We were waiting for it to be implemented last year, but it was not. Although the implementation now is late, at least it finally came," he said.
"And we do welcome it. It's a step forward. We just need the rules," he said.
Unconditional offer
The government recently accepted Meralco's "unconditional offer" to allow its big industrial and commercial customers who consume at least 1 megawatt (MW) to choose their own power supplier.
"We anticipate that this offer and its acceptance will enable the industrial sector to avail itself of the lower time-of-use (TOU) rates of Napocor, help reduce the costs of doing business in the Meralco franchise area, promote investments and the creation of additional jobs, and push privatization forward," Energy Secretary Raphael Lotilla had said.
The TOU scheme provides Napocor customers with flexible hourly rates that are lowest during off-peak hours, or between 10 p.m. and 7 a.m., and highest during peak hours, or from 10 a.m. to 4 p.m. and from 6 p.m. to 9 p.m.
Sundays and holidays are also considered off-peak times.
Rates are lower during the wet season, or from July to December, as electricity demand usually falls during this time due to the colder weather. Hydroelectric plants are also able to produce more power during these months.
Lotilla said President Gloria Macapagal-Arroyo had directed Napocor and Transco to finalize the details of the new arrangement within two weeks.
ERC approval
The scheme could be implemented, however, only after the Energy Regulatory Commission shall have approved the mechanics of the new arrangement, according to the energy secretary.
Once implemented, he said, Meralco's large commercial and industrial customers could take advantage of Napocor's TOU rates by shifting their loads to off-peak hours.
Call centers can take advantage of the TOU scheme as they usually operate during the wee hours of the morning.
Rent and electricity are the third biggest expense of a call center, following labor and telecommunications, according to an industry source.
On top of their monthly electricity bills, call centers usually have to pay between P500 and P1,500 per hour per floor for air-conditioning alone, the source said.
Some manufacturing firms, or those that do not have 24/7 operations, can also take advantage of Napocor's TOU rates as they can shift their operations to off-peak hours.
New cartel?
"Obviously, we'll try to save as much energy as we can by using electricity during off-peak hours. For manufacturing firms that run 24/7, that can be a problem. But others can actually [shift to other power suppliers], especially Napocor, which offer cheaper rates," Dee said.
But militant groups Bagong Alyansang Makabayan (Bayan) and Pamalakaya and consumer advocate People Opposed to Warrantless Electricity Rates (Power) said Meralco's "unconditional offer" was a smokescreen for the government's ploy to team up with "a new cartel."
Bayan said Meralco's dominance in the country would not end with the implementation of partial open access as the Lopez group, which owns Meralco, still maintained holdings in both the generation and distribution sectors.
"Government is just hyping the so-called dismantling of the oligopoly with yet-to-be-seen competition under an assumed level playing field," Power convenor Ramon Ramirez said in a statement yesterday.
He doubted whether large consumers had options to buy cheaper electricity.
"Are there cheaper sources, or will this go the way of the oil industry wherein the supply of electricity is controlled by a few IPPs? Even the privatization of Napocor can lead to a new type of cartel among independent power producers," he said.
Pamalakaya questioned the real intent in Meralco's offer to implement partial open access, particularly with the government's recent threat to take over the distribution utility for non-payment of P42 billion in debts to Napocor.
"Malacañang and Meralco's agreement was not meant to lower electricity rates. That's preposterous," Pamalakaya national chair Fernando Hicap said.
"The power utility giant merely gave in to the request of the Arroyo administration to allow its IPP clients to join Meralco in forming a power cartel, whose operation is similar to the Big Three (Petron, Pilipinas Shell and Chevron Philippines) in the oil industry," he said. (INQ7)
posted by philpower @ 7:18 AM,
