Napocor’s TOU

Our coffee shop gang did recently join me in another round of caffeine-loaded dissection of the question "Is cheaper electricity supply possible?," noting that this column has been passionate about the issue of skyrocketing power rates.

The barako bunch supported this column’s view that it is possible to significantly lower power rates, but disagreed with our tongue-in-cheek assertion that this can be done by shutting down National Power Corp.’s (Napocor) power plants longer and more often thereby allowing the private suppliers of distributors like the Manila Electric Company (Meralco) to sell more power – which is ostensibly cheaper than Napocor since that was what our collective experience showed recently.

It will be recalled that there was a momentary relief from the unabated escalation of power rates a month ago, and the official explanation for this unexpected bliss was that Napocor supplied less power due to maintenance shutdowns of some of its plants. Meralco bought more power from First Gas and Quezon Power resulting in lower electricity bills for us. That also ended the long-running media debate on who really sells cheaper power.

The cappuccino club says Napocor shutdowns are mere palliatives, and we agree. There has to be a longer term solution which would keep power rates affordable to ordinary Filipino families.

One caffeine junkie pointed out that the answer definitely lies within Napocor itself, and it is not in prolonged shutdowns or lowering the astronomical salaries of Napocor executives. He noted that Napocor has of late been talking about a time-of-use scheme or TOU. The scheme involves different power rates at different times of the day. When one consumes more electricity at a time when Napocor is selling it cheaper, the result would be lower electricity bills.

The TOU could lead to a culture of disciplined use of electricity, our friend underscored. Do the ironing at midnight. Watch TV at dawn. Use the electric stove only between 3 and 4 a.m. That should help bring down the monthly electricity bill.

The espresso-nista side of the table, however, was quick to point out the "infirmities" of the TOU scheme. Before the daily wage earners could realize savings from the TOU, they will have to shell out money for a TOU meter, application and installation and for the supply charges.

The savings, if any, would be at best marginal, they explained. Not worth the bother at all.

And why would Napocor cook up such a scheme if the savings would be marginal, the barako brewsters asked. The answer of the espresso-nistas was clear: the TOU, it appears, was not designed for the ordinary Filipino household. It is for the industrial sector, they pointed out.

The main beneficiary, they continued, are giant manufacturers who are flexible enough to concentrate their production during the graveyard shift at which time Napocor would be charging less. Since they normally buy electricity in the hundreds of thousands of pesos a month, these giants would be more than willing to pay for the TOU meter, the installation and application and the supply charges. They are the consumers who can easily half their monthly bill via the TOU.

The same would be true for the residences of the affluent, they added. Since most of these palatial abodes have to run their air-conditioning systems 24/7, they will pay less for the evening to dawn consumption thanks to TOU. The mushrooming call centers stand to gain, too. Their operations peak during the graveyard shift at which time Napocor would be selling power cheaper.

Unfortunately, most offices, schools and commercial establishments who can only run during daytime cannot benefit from this Napocor scheme. Unless we all become insomniacs like my favorite coffee mates and work/shop/bank in the evenings instead.

So, that’s it: the TOU is not what the ordinary Filipino is looking for to ease his power woes. Nobody in the coffee shop table, however, would fault Napocor for making a big media hype out of the TOU. They knew that Napocor has several pending petitions for rate increases before the Energy Regulatory Commission. As its power supply becomes more expensive, it is understandable that it must, at least, show some air valve through which consumers - even the big ones – could breathe.

Where lies the answer then (to the question "how do we get cheaper power?")? The coffee shop gang seems to be unanimous: let there be real competition in the power sector so we can all get competitive power rates. This is the hope spawned by the Wholesale Electricity Spot Market or WESM. When the WESM mechanism is finally in place, power suppliers can merchandise their commodity and buyers can purchase from those who post the lowest price.

But this would work only if Napocor is privatized. A government-owned Napocor will never be conducive to real competition in the power sector, both barako-nites and espresso-nistas point out. Only when its assets are run by private investors would these assets be made more efficient, producing at optimum levels with the least cost. Such is not its current mentality. A state-run Napocor "is mandated to lose money", one iced coffee connoisseur quipped.

That brings us back to a gnawing fear we earlier expressed: has Napocor back-tracked on its plan to privatize its assets? The coffee shop gang believes so. Most visible proof of this change of heart is the marketing blitz for Napocor direct-connect services. Our gang believes this scheme is actually a twin of the TOU. The latter makes connecting directly to Napocor by large industries and affluent households very attractive.

The greater fear is that this blitz could bring in money that would eventually persuade Napocor to drop the privatization program altogether. The problem is the direct connect and the TOU is only for the rich. How do we bring down the cost of power for the ordinary Filipino?

As we hit the blank wall, both barako-nites and espresso-nistas simply chorused: let‚s just keep shutting down Napocor plants.

That should lower our electricity bills.

Pagcor sets trends

The Philippines seems to be heading towards the opposite direction compared to our regional neighbors. Early this year, the Singaporean government announced its decision to proceed with two integrated resorts with casino gaming in the island state. Their Ministry of Home Affairs, together with the Ministries of Community Development, Youth and Sports, Ministry of Finance, and Trade and Industry, have drafted a Casino Control Bill to ensure that the casinos remain free from criminal influence or exploitation, that gaming in the casinos is conducted in accordance with the laws; and that the potential of casinos to cause harm to minors, vulnerable persons and society at large is minimized. The bill also provides for the establishment of the Casino Regulatory Authority with functions and powers over the National Council for Problem Gambling. The Home Affairs Ministry advocates that regulatory control is critical in preserving public confidence and support for the continued growth and success of the casino resorts.

By Oct., the Singapore Tourism Board announced that it will start seeking proposals for one casino resort on the Marina Bay site by the end of Nov. and another on Sentosa Island by the first quarter of 2006. Keppel Land has partnered with Harrahs to bid for both sites, while CapitaLand has tied up with Kerzner International to bid for the Sentosa Island site. The Las Vegas group MGM Mirage is bidding for the Marina Bay site. Other groups in the running include a consortium of Genting International, Star Cruises Ltd and Universal Resort, and a consortium of Publishing & Broadcasting Ltd and Melco International. The individual bidders include Eight Wonders Asia, GuocoLand, Las Vegas Sands, Peermont Global, Sun International and Wynn Resorts Ltd.

Meanwhile, the Las Vegas Sands Corp., the first American resort and gaming company to operate in The People’s Republic of China’s (PRC) Special Administrative Region of Macao, was selected by the Zhuhai Municipal People’s Government of the PRC to proceed with master planning the development of a full-fledged convention-based/lifestyle destination resort on Hengqin Island which will complement its entertainment developments on the Cotai Strip (TM) in Macao. The Hengqin Island resort development, located in the Guangdong Province city of Zhuhai, will occupy more than 1,300 acres of land (5.2 square km) and be located less than one mile away from Las Vegas Sands’ Venetian Macao Hotel Resort Casino currently being built on the master-planned Cotai Strip in Macao.

The Hengqin Island resort development will feature a diversified mix of leisure, tourism and convention amenities including, first-class hotels and villas, first-rate convention facilities, a marina and yacht club, outdoor amphitheater, and an impressive combination of golf, tennis, fishing, and other leisure and recreational activities.

Prime Minister Thaksin Shinawatra has revived his plan to introduce casinos to Thailand as an added attraction for their integrated resorts as a last ditch effort to save the sagging tourism industry despite protests early last year from Buddhist practitioners.

These countries have accepted the fact that tourism traffic fuels national growth. The tourism industry is fast growing in the region and their regional competitors are not standing still. Stand-alone gambling houses offering an array of table games and slot machines will not attract a large number of tourists who would rather go to the casinos nearer their homes. This is the experience of Las Vegas when Indian reservation casinos sprouted overnight in nearby locales.

The trend in the region is to build world-class destinations giving tourists unique or indigenous multi-faceted experiences. While casinos are no doubt part of this spectrum, it is part and parcel of the other attractions such as museums, aquariums, and theme parks that create a holistic experience to be enjoyed by all members of the family.

All our neighbors have surged forward and have set their respective plans in motion to build these integrated resort-casinos. Yet, while our Pagcor has already prepared its plan for an Entertainment City to rise in the reclaimed area in Manila Bay, our Senate has not passed the renewal of the gaming body‚s charter that will enable it to attract investors for the massive undertaking. Timing in building these integrated resorts is critical as investors and casino-resort operators are expanding their operations in Asia since their home markets have already matured. But our inaction to take full advantage of the regional trends is stymied by useless political wrangling which impedes our economic growth.

Not so hidden agenda

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UP Alumni Charity Golf: The UP College of Law classes of 1977 and 1978 in coordination with the UP Law Alumni Association wil be holding the UP Law Golf Club Founders Tournament at the Camp Aguinaldo Golf Club on Dec. 2. This is a fund-raising activity for the benefit of the children of Payatas (through the Payatas feeding project of the class of 1978), Filipino soldiers (through the Class 1977 Foundation’s College of Law Scholarship Program) and their families, and teachers (through financial assistance via donations form class 1977 and 1978). The leaders of Class 1977 are Defense Secretary Avelino ‘Nonong’ Cruz, NTC commissioner Jorge Sarmiento, lawyers Ferdie Domingo, Popoy Ricalde, and Boyet Fernandez, and former Comelec commissioner Ralph Lantion. Meanwhile, leading the class of 1978 are former DAR assistant secretary George Briones, lawyers Tony Ocampo, Alex Poblador and Lito Mondragon, DOTC assistant secretary Noel Cruz, CA Justice Edgardo Camello, Manila RTC Judges Rey Alhambra and Jun Olalia, former DAR Secretart Rene Villa, and Peace Process Secretary Rene Sarmiento. Raffle and door prizes also await the participants.

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