PEPOA bucks bid to reduce open access threshold

The Private Electric Power Operators Association (PEPOA) is opposing a Congressional initiative to lower the threshold for open access from 70 percent to 50 percent.

While PEPOA supports government’s effort to lower power rates, it pointed out that amending the Electric Power Industry Reform Act (EPIRA) at this time “will only distract us from our ongoing efforts to privatize the National Power Corp. (Napocor) and National Transmission Corp. (TransCo) and to make our electric power industry competitive and efficient through restructuring.”

“If the goal is to lower rates, this may not happen as there is still a dominant player in the market. The Napocor and PSALM together still holds more than 70 percent of the market through its own plants and independent power producers (IPP) contracts. Real competition will only happen if there are enough players and no single player can control the prices of electricity,” Ranulfo Ocampo, PEPOA president, said.

According to PEPOA, one effective way to immediately lower electricity rates is for Napocor to pass on to the consumers its savings brought about by the appreciation of the peso.

“If reports are accurate, Napocor had forex gains of about P78.74 billion in 2005 and P68.74 billion in 2006. If that is true, then the consumers should expect hefty power rate reductions from Napocor,” the PEPOA official said.

Under the incremental currency exchange rate adjustment (ICERA) rules of the Energy Regulatory Commission (ERC), Napocor should have applied for a rate reduction as a result of the peso appreciation.

Recently, the implementing rules and regulations (IRR) of the EPIRA were amended to make pass-through costs such as forex gains or losses automatic without the need for tedious public hearings which will take months if not years to finish.

Ocampo said changing  the rules in the middle of the game will only confuse investors and the stakeholders.

He said government should focus on the recent successful privatization of the 600-MW Masinloc power plant where it got a hefty price of $930 million.

“This high offer and the presence of six bidders only show the growing confidence of investors in the privatization efforts of the government,” he said.