DTI seeks way to ease power rate hike in ecozones

MANILA, Philippines - The Department of Trade and Industry (DTI) vowed that it will find a way to maintain the power rates in the economic zones amidst reports that the new scheme the government is working on will force firms to pay a higher power rate.

Locators in ecozones are concerned over the lapse of the Ecozone Rate Program (ERP) although the Power Sector Assets and Liabilities Management Corp. (PSALM) already announced the extension of the program.

Currently, the ERP benefits 279 customers in industrial areas. These customers contribute 43 percent of the total Philippine manufacturing exports or around $19 billion and provide more than 222,213 jobs.

“We are going to assist the industries in this challenge,” Trade and Industry Secretary Gregory L. Domingo told reporters. When asked if they have already spoken with PSALM regarding the special power rates, Domingo said “PSALM has always been on board. It’s just a matter of completing the Implementing Rules and Regulations (IRR).”

“The willingness and the intent to help is always there,” he added.

In a separate interview, Trade Undersecretary Cristino L. Panlilio said they may have found a way to help the locators. He said the rates may not be as low as those provided under the ERP but it is still lower than commercial rates. “It (rates) will be higher but it will still be competitive.”

He said the solution they are looking for should not entail any cost to the government. “Don’t use WESM. We will give them bilateral supply agreements that will not use the WESM mechanism.”

Panlilio said the zones where the affected locators are can help the firms or they themselves can enter into bilateral agreements with Angat and then not use WESM. Panlilio said they have already spoken with Angat and the power producer has already agreed because it is owned by PSALM. Other firms may be a challenge especially those privately owned. The others they are eyeing are Ambuklao, Binga and Bakon.

For the private, Panlilio conceded that the government may have to give them some form of incentive in order for them to agree to lower power rates. However, he cleared that the firms will not be subsidized because they will still be selling power thus they will still make money.

He said they are looking for cheaper sources of power like hydro and geothermal plant. He said they already approached Sual Coal fired plant but they were turned down because coal power is expensive.

The ERP is an offshoot of a Memorandum of Agreement (MOA) between Meralco and Napocor which provides for the Provision of Generation Rates for High Load Factor PEZA-Accredited Industries signed on Sept. 19, 2007.