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PRESS RELEASE
OFFICE OF HON. RAYMOND DEMOCRITO C. MENDOZA
Trade Union Congress Party (TUCP Party-List)
House of Representatives, South Wing 204, Batasan Complex,
Quezon CityContact Person: Lois Oliva Tel/Fax: 951-301121 November
2011
TUCP calls for the retention of discounted power rates for
ecozonesWarns against open access for ecozones to jack up power
rates of captive
residential customers of Meralco;
Files a resolution to reduce power cost for economic
competitiveness
Rep. Raymond Democrito C. Mendoza of the party-list TUCP today
called on theDepartment of Energy (DOE) and the Power Sector Assets
and Liabilities ManagementCorp. (PSALM) to extend the lifetime of
the Memorandum of Agreement (MOA)
between the National Power Corp. (NAPOCOR) and the Manila
Electric Co. (Meralco)which provided for the discounted rates of
power for around 279 economic zoneslocators within Meralcos
franchise areas.
The DOE and PSALM should simply direct the power producers
supplying the powerto ecozones to continue doing so on those terms
as part of their legitimate costs ofdoing business in the
Philippines. Notwithstanding these existing discounts, the
power
producers are already earning beyond the 12% return-on-rate base
set for utilities. Thediscount should be treated by the DOE and
PSALM as part of business costs to be
borne by power producers for the privilege of doing business in
the country and as partand parcel of the price of participating in
a very profitable electricity industry in thePhilippines. In the
meantime, DOE and PSALM should look at measures to reduce
ratesincluding setting aside the performance-based ratemaking,
stringently reviewing whatcan be charged as stranded costs, and
placing a cap on IPPs rate of return, saidMendoza.
TUCP also rejected the proposal of the DOE and PSALM of
accelerating open accesswhereby the ecozone locators can connect
with their IPP of choice. The DOE hasindicated that it may be
improper for the government to interfere in the pricing of
power
being done by the fully-privatized Independent Power Producers.
Instead, the proposedsolution of the DOE is to accelerate open
access for the 1 MW load.
The DOE solution is no solution at all. Open access is a
double-edged sword.Although we may have lower rates for ecozones,
the trade-off is that we will get higherrates for captive
residential users. We will effectively have the
lower/mid-incomeresidential users subsidizing the lower rates for
the ecozones, emphasized Mendoza.TUCP points out that whatever the
power rates to be negotiated by the ecozones underopen access will
still be much higher than what they are currently paying
Meralco.
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Under the open access scheme, the ecozones will be able to
negotiate for voluQAmediscount in their power rates directly with
IPPs, but the Meralco distributor will nowseek to recover its cost
of investments and its returns over the smaller captiveresidential
market. The consequence is that residential rates will spiral
upwards,explained the TUCP solon.
Let us remember that under the open access regime, Meralco will
try to recover itstargeted revenues when it still had the ecozones
and the captive residential market, butthis time solely from its
remaining captive market, which is largely residential. Thelarge
industrial users with 1 MW load and above can now buy power
directly from theIPP which can give them a rate lower than
residential but the residential will end upwith higher rates,
explained Mendoza.
The solon also noted that even the distribution companies are
asking for postponementof open access because they are not ready.
Further, there is also no consumer impactassessment that has been
done on the effects of open access.
Let us not rush into open access without study. It will
definitely just jack-up rates inthe end. Let us get the World Bank
or Asian Development Bank to first do a consumerimpact assessment
and simulation of open access rates, cautioned Mendoza.
At a time when international capital is moving to Asia, we may
miss out at becoming aforeign direct investment destination. Most
recent figures point out that in 2009, thePhilippines only
attracted $1.9 billion FDI compared to Indonesias $4.8
billion;Thailands $5.9 billion; Vietnams $7.6 billion; and
Singapores $16.2 billion. Our
power rates which are the fifth highest in the world continue to
make us uncompetitive.
The data speaks for itself. What is the most patriotic thing for
the DOE, PSALM andERC to do is to reduce the price of power so that
we can attract more foreign directinvestments that will put up
factories and create jobs for the 3 million unemployedworkers in
our country. Sustainable and gainful employment and livelihood for
allFilipinos is the best answer to the problem of persistent
poverty in the Philippines, theChairman of the House Committee on
Poverty Alleviation stressed.
The TUCP solon filed House Resolution 1897 directing the House
Committees onEnergy, Labor and Employment, and Trade and Industry
to jointly inquire in aid oflegislation, regarding the problems and
issues pertaining to the impending termination
of the NAPOCOR-Meralco MOA that may negatively affect the
economy and mostespecially the jobs and livelihood of 230,000
workers in the ecozones.
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