Right now, the Philippines has the third largest share of the US sugar quota, next to the Dominican Republic and Brazil. Around seven percent (151,667 metric tons) of our expected 2.018 million metric tons sugar production for the current cropyear 2005-2006 has been allocated for the US market, a market that gives a very good price for our sugar, while the remaining 93 percent is for domestic consumption.
Official sources say that the US Department of Agriculture is announcing soon an increase in its sugar imports. Let’s hope that the Philippines will get a big share of this increase. After all, our sugar farmers are expecting a very good crop this year and there is more than enough to meet the increased demand from the Americans. Increased demand for our sugar will mean better income for our farmers and a boost to our sagging economy.
The Napocor, they say, continues to sell power at rates much lower than what it should be charging, as if its contribution to the burgeoning public sector deficit wasn’t enough.
Last year, Napocor’s debts accounted for one third of the consolidated public sector deficit (CPSD). The amount was so staggering at P280 billion, that there seemed to be no option left for government but to privatize the assets of Napocor. This way, government gets rid of the burden of subsidizing a government-owned company that’s losing millions of pesos everyday. In addition, privatizing Napocor is totally in line with the EPIRA, which also allowed the National Government to absorb P200 billion of Napocor’s debts in order to pave the way for its privatization.
But after the recent absorption by the National Government of P200 billion of Napocor’s outstanding obligations, Napocor went into another borrowing frenzy. PSALM recently sold on behalf of Napocor $400 million worth of six-year notes. The notes will carry a guarantee from the National Government with a quarterly coupon of the prevailing rate for a three-month LIBOR plus an additional 425 basis points. To add insult to injury, negotiations are reportedly underway to secure another $150 million in debts.
Are these new borrowings an indication that NPC intends to stay in the generation business, which also means getting more direct connections? Is Napocor’s continued existence far more important than solving the country’s ballooning budget deficit?
Like you, we are exposing anomalous practices of any utility in the power industry that we discover to protect consumers from unjust and unreasonable utility rates.
Proof of our efforts was a petition filed by a retired lady COA auditor by the name of Catalina Abeto of Tacloban City and myself, for rate reduction in the amount of P0.62/kWh against the Leyte II Electric Cooperative, Inc. with the former Energy Regulatory Board back in April 1998 when we discovered that we were being overcharged in our monthly billing. After two years, the former ERB ruled in our favor granting a reduction of P0.41/kWh on the rates charged by the said coop.
In another instance, the Cagayan de Oro Chamber of Commerce in August 1994 invited me to explain to them the new ERC approved rates for Cagayan Electric Power and Light Company (Cepalco). After explaining to them the discrepancy between the ERC approved rates in its decision and what appeared in its monthly billing, the chamber wrote the commission to inquire about the said discrepancy. That inquiry led to a decision by the commission directing Cepalco management to refund to its consumers an over-collection of over a million pesos.
On the proliferation of direct connections which allow large industries to directly source their power from Napocor at a lower rate, we checked with the tariff division of Napocor and asked them if the "One Grid, One Rate" policy of Napocor as approved by the regulator applies in this case. According to them, this applies, meaning, that Napocor charges these directly connected industries the same rate that they give the distributors where they are located.
The uniform rate notwithstanding, any manner of poaching that leads to higher rates for the consumers should be disallowed by the regulator. In the same spirit that the regulator, also for the protection of the consumers, should strictly enforce the economic dispatch criteria and the least-cost-supply obligation of the distribution utilities in order to obtain the best price for the customers.
Failing in such enforcement, large industries, within the franchise of a DU that prefers to buys expensive power from its sister company, will buy directly from Napocor. Meralco’s IPP rates are much higher than that of Napocor – a matter that we brought to the attention of ERC but which has remained unacted upon till now, sadly.
As a backgrounder, the May 2003 ERC decision on Meralco’s unbundled rate approved a P2.46/kWh generation rate for Napocor and an average Meralco-IPPs rate at P4.21/kWh or a difference of P1.75/kwh. What we got, though, from the combined average generation rate of Napocor and Meralco-IPPs, in our monthly billing was P3.40/kwh in our June 2003 billing when the new Meralco unbundled rate was implemented. After ERC granted Napocor its petition for a rate increase last April of which Nasecore was an oppositor, Napocor’s rate in Luzon increased to P4.40/kWh from P3.93/kWh so that what we saw in our billing was an average generation rate of P4.93/kWh instead of Napocor’s P4.40/kWh because the rate of Meralco IPPs was more than P5/kWh.
Consumers of Cagayan de Oro City have the same issue against their distributors, Cepalco, having its own IPPs. One of these is Minergy which has an ERC approved generation rate of P45/kWh while that of Napocor is only P2.53/kWh. But this is not what the consumers pay but an average rate between rates of Napocor and that of Cepalco-IPPs.
Admittedly, the consumer in the electricity industry is far from being fully and adequately protected, both in law and in practice: economic dispatch and least cost supply have to be enforced; discriminatory pricing in electricity supply and metering has to be investigated; rate base recovery must be verified.
We can assure you that there are many areas where we can cut cost and limit our Meralco bills to the true cost of power, if we join hands and voices at the Energy Regulatory Commission and in Congress.
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