Higher power rates loom with Meralco’s new tack
Monday, April 03, 2006
By MYRNA M. VELASCO
Four million residential and commercial customers of the Manila Electric Company (Meralco) will pay higher electricity rates with the initial choice given to large industrial endusers and the limited dispatch allowed for the contracted independent power producers (IPPs) of the utility firm.
Meralco Vice President Ivanna G. de la Peña said that based on an agreement, the approval of which is pending before the Energy Regulatory Commission (ERC), the contracted IPPs of Meralco will just be dispatched at 56 percent, way below the 83 to 86 percent to be guaranteed under its contracts with First Gas, Quezon Power, and Duracom.
At present, the dispatch of Meralco IPPs are mostly constrained at 60 to 65 percent making its rates, as passed on to consumers, still artificially expensive at times compared to NPC’s.
"With open access offered to those with usage of one megawatt and up, we will get bulk of our supply from our contracted IPPs, but since the proposal is that our dispatch would be constrained, the impact will be that the residential and other smaller commercial customers with peak demand below one megawatt will pay higher electricity bills," she said.
However, she emphasized that if the dispatch of its IPPs would be maximized at 83 to 86 percent, Meralco customers will be able to benefit from rate reduction, but this is not the scenario being sorted out by the parties involved.
Energy Secretary Raphael P.M. Lotilla admitted that the government accepted the offer of unconditional open access given that "government will consider Meralco’s separate concern on the dispatch of its IPPs."
Households and entities with less than one megawatt of peak demand which are also called captive customers will have no choice yet but to get their supply from a utility like Meralco, and if maximum dispatch of contracted capacity is not guaranteed, the total cost will just be divided to smaller base of customers, thus, the higher the electricity rates will be.
NPC president Cyril C. del Callar divulged that the agreement on dispatch "has to be resolved in two weeks time... it’s only ERC who can declare the level of Meralco’s procurement." He acknowledged that there is indeed a pending agreement due for approval of the ERC.
The state-owned power firm admitted that it fears losing its market, so it also wants to assure that its revenue stream is guaranteed from the sales to customers.
Open access, according to the government, will help privatization move forward because this will provide alternative market for the buyers of NPC assets and also to those eyeing to put up new power capacity, though this is as a violation under the Electric Power Industry Reform Act.
In the case of industries, this could provide them leeway in procuring cheaper electricity from suppliers, such as the time-of-use offer of NPC and from other power producers.
Under the proposed setup, however, residential customers are seen placed at a more "disadvantaged position" because since they lack choice, they will pay the full cost of electricity supplied to them normally those capacity under contract with the utility servicing them.
posted by philpower @ 5:29 AM,
