Power cartel

Consumers are understandably irate at the hefty increase in electricity rates, with the country’s biggest power distribution company Meralco petitioning for a P4.15 increase per kilowatt hour to be implemented on a staggered basis. 

As explained by power industry insiders, the shutdown of the Malampaya natural gas plant (where Meralco gets its usual supply) due to maintenance work has affected the supply of electricity. This has compelled the power distribution company to source its supply from independent producers via the Wholesale Electricity Spot Market or WESM where the prices skyrocketed in just a matter of weeks to more than P33 per kilowatt hour from about P13.50. Compounding the Malampaya shutdown are the outages that also hit several power plants, thereby affecting the law of supply and demand with supply being insufficient to meet the demand.

However, there is a lot of talk about a so-called “power cartel’ behind the unprecedented increase in electricity rates, with suspicions that the power supply shortage could be artificial or even intentional due to the – curiously – almost simultaneous unscheduled outages from as many as 10 power plants. Department of Energy insiders also admitted the possibility of a conspiracy to withhold electricity supply, prompting the DOE and the Department of Justice to look into allegations of collusion among suppliers/power plant operators.

Many are blaming the Electric Power Industry Reform Act or EPIRA law that was enacted precisely to reform the energy sector and lower rates by spurring competition among suppliers. The EPIRA law liberalized the industry and also deregulated rate setting through the WESM – but those in the know say this has encouraged abuse and anti-competitive behavior because power producers can actually dictate electricity prices at outrageous rates especially if they supply the demand shortfall. In fact, Mindanao businessmen specifically pinpointed the EPIRA as the source of all their power problems, lamenting the spike in rates despite the frequent occurrence of blackouts and power outages. Perhaps it’s really time for our legislators to review the EPIRA law to see if it has been effective in lowering costs, or in the words of some consumers, to see if EPIRA was indeed an “epic fail.”

Industry observers tell us that government has to look into the construction of additional power plants to ensure a stable energy supply for the whole country. That’s also one of the reasons why Meralco wants to go into the power generation business so as not to be totally dependent on suppliers. Meralco president Oscar Reyes pointed out that Meralco has not raised its distribution charges, and also explained that the country has not built any new power plant for more than a decade. In contrast, the number of electricity consumers has increased over the years and naturally this has spiked the demand for energy.

Oscar says a 135-MW power plant would cost about P12 billion – which is why the administration should seriously consider the call of foreign businessmen to look into amending certain “antiquated” constitutional provisions that would welcome foreign investors to the Philippines. According to an analyst for a Singapore-based outfit, the impending energy problems – as seen in the recent power shortages in Mindanao and other parts of the country – make investments in the energy sector critical to enable the Philippines to continue its economic growth. 

Worldwide attention on rehab

UN Secretary General Ban Ki-moon will be coming here to check for himself the condition of Typhoon Yolanda victims and to see how the relief work is going.

A United Nations insider tells us that when they give the $404 million fund for rehabilitation, they want to make sure that the money will go to where it is intended. UN Undersecretary General for Humanitarian Affairs Valerie Amos is asking donors to fund a $791 million long-term recovery plan for Typhoon Yolanda victims, with rebuilding homes now a focus of rehabilitation efforts.

Relief operations have been marred by accusations of non-delivery and even stealing, with allegations that some unscrupulous traders have been selling relief packs from foreign donors. The UN is also looking at reports that several remote barangays and islands have yet to receive aid a month after the onslaught of the super typhoon.

US State Secretary John Kerry is coming over to see for himself the situation in Tacloban City and other areas devastated by Yolanda. If one could recall, Secretary Kerry’s October visit was scrapped because of a typhoon, but this time the reason for his visit is another typhoon. Naturally, American taxpayers want to make sure that their money – with the US having provided over $60 million in aid – will be put to good use and not “diverted” for some other purpose.

As noted by a World Bank official, timely reconstruction will greatly mitigate the economic and social impact of the super typhoon, with the cost of damage now estimated at over P35 billion, while the death toll inches closer to 10,000.

No contingency plan?

Still on disasters, party list Representative Arnel Ty is urging Transportation Secretary Jun Abaya to look into allegations that the Philippine Coast Guard in Iloilo had no contingency plan when PSALMS’s Power Barge 103 ran aground in the wake of Typhoon Yolanda, spilling almost a million liters of bunker fuel into the environment. It can also be recalled that a couple of days after the accidental discharge, the Iloilo PCG was quick to issue a statement that the spill has been contained.  Ty is calling for compensation for the affected residents who are complaining about health risks, not to mention the lost income opportunities on account of the spill. Earlier, PSALM had offered P2 million as compensation for the affected families and the municipality of Estancia – with the amount described as “measly” by many.

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