Spot market for power to open next week
Friday, June 16, 2006
By Joyce Pangco Pañares
PRESIDENT Gloria Macapagal Arroyo yesterday ordered the opening of a spot market for electricity next week to bring down power prices after delaying the project for almost two years.
“It will be an open market once we launch [the market],” she said.
“Meralco [Manila Electric Co.] and other electric cooperatives will be the buyers while Napocor [National Power Corp.] and the other generating companies will be the sellers.”
The electricity spot market was supposed to start in 2004, but the government’s failure to privatize at least 70 percent of Napocor has prevented it from happening.
“The President indicated that since we are now ready, then we should go for June 23,” Energy Secretary Raphael Lotilla said.
“We need not wait for a later date.”
The spot market would lead to lower prices, but nowhere near what could be achieved under a fully open system where consumers could choose freely where to buy electricity, Lotilla said.
“They [consumers] will be able to see what the current prices are and we are hoping that, with greater transparency and more competition, there will be more reasonable rates for electricity,” he said.
The role of the market surveillance committee in the market would ensure all stakeholders would be fair.
“A tripartite committee is now being organized among the Energy Regulatory Commission, the Philippine Energy Market Corp. and the [energy department],” Lotilla said.
“They will be the ones to set what we call caps that would prevent volatility in electricity rates.”
But an analyst said that if a generator such as Napocor was in a dominant position in the market, it could use its stature to keep electricity prices high.
And a generator with a number of fixed contracts would see the spot market as an incremental business, so it would offer below-market prices to use its capacity fully, Peter Wallace said.
“The trouble is that such low prices would discourage new entrants who’d see little chance to make profit,” he said.
“And the Philippines desperately needs more power companies to invest if we’re not to suffer blackouts in the not-so-distant future. So it’s a delicate balancing act.” With Alena Mae S. Flores
posted by philpower @ 6:25 AM,
