In a recent forum held during the observance of National Energy Week, London-based World Energy (WEC) secretary general Gerald Doucet stated that no government can assure adequate power supply if it keeps insisting on cheap electricity rates.
Doucet said: "One of the things (a country) can’t continue to do is base energy policy on cheap energy. The companies that deliver electricity have to get a return. They have to cover costs or investments will stop."
President Arroyo earlier asked the Energy Regulatory Commission (ERC) to reconsider its decision granting the Manila Electric Co. (Meralco) a provisional authority to increase its rates by an average of P0.12 per kilowatt hour (kwh) effective January 2004.
"If a country refuses to pay a reasonable price for electricity, it has to pay for the absence of electricity in some other way," Doucet warned, stressing that the rising cost of power is a worldwide trend, and the consumers will just have to accept it."
In the same forum, WEC chairman Antonio del Rosario also emphasized that if we keep insisting only on cheap power, nobody will invest to make such power available.
Earlier, Energy Secretary Vincent Perez exhorted government to strike a balance between affordable power rates for consumers and ensuring the viability of investments in the power sector.
The Energy Department has admitted that blackouts are now being experienced in Cebu and Panay. Observers traced this to lack of investors in the power industry because they were precisely driven away by government’s inability to make the industry competitive and viable.
Even more widespread power outages are expected if government fails to attract new investments in power generation and transmission. Investors would be unwilling to come in if the issues of artificially low power rates are not resolved, industry observers said.
Earlier, ERC explained its ruling granting Meralco the provisional authority to increase its rates saying that the power industry needs sustained financial viability of distribution utilities, or else the country will face another power crisis.
Meanwhile, the National Association of Electricity Consumers for Reforms (Nasecore) will hold a picket today (Dec. 22) at the ERC office in Ortigas to protest the 12-centavo rate hike given to Meralco.
There will be a scheduled public hearing on the provisional authority granted by the ERC to the Lopez-controlled power utility firm to increase its rates by 12 centavos per kilowatthour (kWh) starting its January cycle of next year, out of 13.8 centavos it was asking. –Donnabelle Gatdula
Nasecore president Pete Ilagan said the series of increases Meralco has been given, not counting the automatic adjustments that had been built into its distribution and generation costs, has allowed Meralco to milk its over four million customers, the recent refund notwithstanding.
For his part, Meralco president Jesus Francisco said they are looking forward to the start of the public hearing for the provisional authority on power firm’s rate increase so that they can explain clearly to the public the reasons why the company has to jack up its prices.
We are prepared to answer their questions," Francisco said, when asked about the public hearing.
In a separate opposition paper filed by consumerist Genaro C. Lualhati, he said the controversial rate-application is prejudicial to the Court of Appeals Case No. 77559 which seeks to review an ERC Order dated May 30, 2003 that approved Meralco’s unbundling application which authorized it to increase its rates by as much as 616 percent.
According to Lualhati, the order now on appeal allowed Meralco to charge distribution rates to residential customers using 0-200kWh of P1.89/kWh; P2.19/kWh for 201-300 kWh; and P2.48/kWh for those exceeding 300 kWh. Meralco claimed its distribution charge prior to rate unbundling was only P0.75 per kWh.
The latest rate increase application, Lualhati said, is prejudicial as it is intended to contradict and pre-empt the exposure and discredit of the approved (unbundled) rates.
Reckoning from Meralco’s claimed revenue requirements for 2002 (P27.4 billion) and the sales revenue to be generated at minimum increase (P1.89 per kWh and 21.8 B kWh sales), it stands to pad its revenues by P13.9 billion.