 |
|
THE POWER TO CHOOSE
The Philippine Star A power sector reform law had hoped to set the direction in 2001. Yet for the longest time, consumers continue to be at the mercy of power distributors such as Manila Electric Co. instead of being empowered to choose their own. Lately, calls are mounting to implement open access – a system under which end-users are allowed to buy electricity directly from power generators while paying a wheeling fee to distributors for the use of their lines. Rightly so, many industries feel the freedom of choice would result in more competitive and lower rates. Several conditions have been set under the power sector reform law before open access can begin. Some of them are already in place, while a few others may take time to realize. With high power rates as among the named culprits for the country's diminished competitiveness, moves to amend the Electric Power Industry Reform Act (EPIRA) to accelerate open access have been set in motion. Whether these would enjoy smooth sailing remains to be seen. Changing the rules The EPIRA mandated open access to begin not later than three years from when the law became effective. However, several conditions have been set before retail competition can begin, among which are the establishment of a wholesale electricity spot market (WESM), the unbundling of transmission and distribution charges, and the removal of cross subsidies among the various sectors and industry classes of the power industry. As we all know, these three conditions have already been complied with. Unfortunately, a major provision still needs to be accomplished, and that is to privatize at least 70 percent of Napocor's total generating capacity in Recent asset sales have pushed the privatization tally up, though still short of last year's goal of 50 percent. Overall, this is still a positive sign considering that most of the big ones – such as Calaca and Masinloc – have been successfully auctioned off after several disappointing attempts. The goal is to reach the 70 percent target before the end of this year, something that would seem forever for industries that have been hoping for more competitive power rates years back when Efforts are now underway in Congress to relax EPIRA by bringing down the asset sale requirement to 50 percent – which could be easily achieved early this year – instead of the 70 percent cap. To be expected, power plant owners are complaining why the rules should be changed in the middle of the game. They contend that open access should only kick in if Napocor has become truly a minority player. The group fears that that if left with still half of the country's power generating assets, the state-owned power firm would continue to be a strong monopolistic force to contend with. If this means that Napocor would have the market power to offer cheaper electricity to consumers, I guess this is well and good. Other options Other options may be considered so that the privatization target could be lowered without too much fuss from some private power producers. For instance, the remaining unsold Napocor power plants could be grouped together so that they could truly compete with the portfolios of other power plants. This is close to what is already happening now when Napocor sells to the WESM its own generation output while competing with PSALM, which does trading for the output of Napocor-contracted independent power producers. This in itself is already partial open access, and should be good enough to begin with. Pushing sales On the other hand, the 70 percent privatization requirement for open access could easily be reached this year with government bent on selling more power assets, not just to meet its sales target, but to also raise funds that will pay off Napocor's huge debt. After Calaca and Masinloc, the next big one lined up is the Tiwi-Makban geothermal power plant, which if sold would bring the privatization level to 50 percent of Napocor's total generating capacity in The government must also transfer to private hands the power supply contracts it has with independent power producers, another thing that may probably take time. Remember that during the height of the power crisis in the 1990s, the government contracted IPPs to supply the country with electricity over the long-term; these too must eventually be administered by private investors. Creating a new monopoly It is my hope that selling assets to break down a monopoly that is Napocor would not lead to the creation of another monopoly. This would veer away from the original spirit of the law which is to foster competition in the industry. A section of the power reform law states that “no company or related groups can own, operate or control more than 30 percent of the installed generating capacity of a grid and/or 25 percent of the national installed generating capacity.” The intention of this section is to promote competition and prevent harmful monopoly and abuse. Are industry regulators making sure that no one is close – if not already – violating the law? Perhaps, we should do our math next time. Line up the private IPPs and start counting which power plants they've won and how big their capacities have become as a result of government's asset sales. For instance, given PNOC-EDC's sheer size, being the country's largest geothermal company in terms of capacity, its winning bidder may already be close to meeting the cap. My worry is that we may be breaking a monopoly only to create another. “Pag-usapan Natin” at IBC-TV 13 Watch “Pag-usapan Natin,” a segment of the IBC-TV 13 news program News Tonite, from Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center,
| |||
|