Tuesday, January 14, 2014

PH power suppliers aiming for big profits

Malampaya natural gas project in Palawan.
When the Malampaya offshore gas project in Palawan underwent a maintenance repair, a power rate hike went berserk thus causing millions of Metro Manila consumers to express worry that the latest burden would impact on their household expenses.

The question that lingers in my mind is how come the Manila Electric Company (Meralco), which sources out most of its cheap power supply from Malampaya failed to anticipate the disastrous impacts of the shutdown, knowing full well that this could terribly put millions of financially-hard up consumers on the quagmire?

Consumer groups, however, have other complaints to make. Some of them even went out of their way to file a Temporary Restraining Order (TRO) before the appropriate courts so that the latest spike in power rates could be averted outright. Likewise, they're putting the blame on the Energy Regulatory Commission (ERC) for granting the sinister wishes of Meralco to increase the power rate by more than P4 pesos per kilowatt hour on the first tranche until it reaches the required power increase of almost P8 pesos per kwh.

There was even a scenario wherein consumer groups had suspected that Meralco and ERC officials may have colluded as a means to trick the public into believing that the power rate hike was justified. If there was any secret agreement between the two parties, the Department of Justice has ordered an investigation in order to find out as to whether money changed hands to favor the Meralco's initiative.

For its part, Meralco officials claimed that the primordial reason as to why there's a power rate increase was because alternative power suppliers were selling their power at a much higher cost compared to what Malampaya gas plant's tag price.

Amid the chaos and verbal tussles between consumer groups and Meralco, including some ERC officials, the Supreme Court has granted the wishes of the power consumers by issuing a TRO that prevented the lone power distributor Meralco from implementing its power rate increases into effect.

Normally, a problem comes in when a certain power distributor is monopolizing the power distribution. The point is that there is no competition in the market where consumers may have the option to pick which power distributor they want to use for their electricity needs. In the past, Metro Manila residents had suffered a lot because of power shortages, which lasted for a couple of days.

Now, Meralco is saying that the lack of power distribution may cause unwanted black outs all over Metro Manila because it may no longer be able to account for the costs of buying expensive power from other suppliers who are always ready to share for profits. According to Meralco, its failure to collect the desired
power rate increases would eventually result to disrupting the flow of electricity in Metro Manila.

The way I understand it, Meralco is getting into a situation where it makes the millions of consumers as hostages to advance its own interests. That's why some lawmakers were espousing for the idea to grant President Benigno Aquino III emergency powers to resolve the power supply and demand issue. But

Energy Secretary Jericho Petilla said in a report that this was not a good idea because it would send a wrong signal to power utilities companies that the move could be anti-business.

My unsolicited suggestion is for the present administration to test the murky waters once more by introducing a mechanism that will avert the negative impacts of power rate hikes. One of these could be the creation of a buffer whose mission is to install a power supply grid that could be tapped once the Malampaya gas plant is undergoing maintenance repair. In this way, Meralco would be able to source out its power supply needs temporarily from a government power grid at a much cheaper cost.

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