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Saturday, August 05, 2006
Meralco cuts electricity rates
MALACANANG on Friday announced a 52-centavo per kilowatt-hour (kwh) average power rate reduction in the August electric bills of residents in the Manila Electric Company (Meralco) franchise areas and 30 to 35 centavos from other areas.
President Gloria Macapagal-Arroyo said the reduction would translate to a decrease of more than P100 in the electric bill of a household consuming 200 kwh a month.
Arroyo said this is due to the wholesale electricity spot market (WESM) where electric companies and large consumers can buy power from different power plants. "Ito ang bunga ng malayang kumpetensya sa bentahan ng kuryente mula sa mga power generators (This is the result of free competition in the sale of electricity among power generators)," she said.
Energy Secretary Raphael Perpetuo Lotilla said the 52-centavo reduction is relative to the cost of electricity in May to July but would translate to a 79-centavo decline if compared with the cost of power in July alone.
Lotilla said the decrease would be seen in the generation charge. Energy Undersecretary Melinda Ocampo said there will be a one to two-centavo reduction in the systems loss in addition to the lower generation charge.
Arroyo said there will be more reforms in order to lower the cost of electricity such as open access and retail competition by distribution of utilities at the level of household industries and businesses.
Lotilla said under the WESM, those consuming one megawatt and above can buy power directly from generating companies.
He said the trend towards lower cost of electricity is likely in the coming months because hydro power plants will be maximized during the rainy season.
Lotilla also said not even the rising cost of oil in the world market would affect power cost because of the spot market and the maximized use of indigenous and renewable energy. Ocampo said the National Power Corporation (Napocor) only uses 1.6 percent of oil in its plants.
He said oil prices are still low compared to other countries in Southeast Asia like Thailand. He said the Philippines imports 50 percent of refined oil products but prices of diesel are still low and the oil companies could still give P1 discounts for jeepneys as well as cross subsidies.
This developed as Lotilla said the sale of the Masinloc power plant would have to be bid out anew because there is no supply contract that could be attached to the plant. He said the spot market was also not ready when Masinloc was put up for sale. The WESM was only inaugurated last June 23.
Lotilla said his office will conduct an analysis, hold consultations with prospective bidders, and work particularly on having a supply contract with Meralco. "If all of these are there, we would not have to sell Masinloc as a merchant plant and avoid any accusations that somebody was trying to withhold supply contracts because it wanted to acquire the plant for itself," he said.
He said the board of the Power Sector Assets and Liabilities Management (Psalm) Corporation had decided to serve the notice of termination last month but is just allowing the 30-day notice period to lapse. He said the Psalm board will decide on August 6, the date of termination, when to bid out the plant. (JMR/Sunnex)
(August 5, 2006 issue)
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