DOE told: Give preview of power rates

MANILA, Philippines - Sen. Ralph Recto called yesterday on the Department of Energy (DOE) to provide the Senate with a preview of power rates until 2016.

In a statement, the Senate ways and means chairman said high power rates are the single biggest stumbling block to the expansion of the local manufacturing sector.

“We’ve the most expensive power rates in the region, are we still going to be the most expensive in 2016?” he said.

Recto said investors must be allowed to chart their investment or expansion plans, particularly in the manufacturing sector.

“I guess it’s harmless to wish that even though power rates have no chance of coming down, it would at least not increase in the years leading to 2016,” he said.

“A sneak peak of the power rate situation would signal predictability in the pricing and help industry players plan their expansion around this price scenario.”

The “power price scenario” would also gain significance as consumers brace for a new wave of increase in power rates starting this month, he added.

Recto said Arsenio Balisacan, acting chief of the National Economic and Development Authority (NEDA), must undertake an investment impact study of the rate increase of the National Power Corp. (Napocor).

“NEDA should have taken a look at this to check if this was congruent to good policy,” he said.

Recto said he would rather keep the current electricity prices to increase ten-fold the investment portfolio and ultimately secure an investment grade status from multinational credit rating agencies.

“Why not keep the prices at current levels, which should get a more economic rate of return rather than raise power prices and stymie investment?” he said.

“Instead of looking forward to the traditional Flores de Mayo, each consumer would be rudely treated to a spectacle called Increases de Mayo.”

Recto said government is actually imposing a new tax in passing on to consumers the burden of paying the debts of Napocor through the new wave of power rate increases.

“The simultaneous power rate hikes in Luzon, Visayas and Mindanao are practically new taxes to be shouldered by consumers since the proceeds will be used to pay down the multi-billion debts incurred by Napocor,” he said.

Power consumers will pay higher electricity this month after the Energy Regulatory Commission (ERC) granted Napocor’s proposal to jack up generation charges.

Napocor will increase power charge in Luzon by 69.04 centavos per kilowatt-hour; Visayas by 60.60 centavos per kwh, and Mindanao by 4.42 centavos per kwh.

Currently, Napocor’s effective rate for Luzon stands at P5.0160 per kwh; P4.0740 per kwh in Visayas; and, only P2.9321 per kwh in Mindanao.

The price hike covers the pending joint applications of Napocor and the Power Sector Assets and Liabilities Management Corp. (PSALM) under the Generation Rate Adjustment Mechanism (Gram), which allows utilities to recover costs associated with fuel and purchased power, and Incremental Currency Exchange Rate Adjustment (Icera) Mechanism, which allows utilities to recover foreign exchange-related costs.

Coinciding with the power rate adjustments is the admission of PSALM, the body tasked to sell the assets of Napocor to pay off its debts, that it incurred losses of up to P15 billion between 2001 and 2011 from its Mindanao power plants.