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Power rate hikes like Yolanda’s storm surge

PCCI fears heavy toll on economy

THE Aquino administration slept on its job in the energy sector and the consequential power rate  increase is “like the Yolanda storm surge” that will have a serious impact on the economy and the lives of millions of Filipinos, according to the Philippine Chamber of Commerce and Industry (PCCI).

“We can consider these man-made calamities,” said PCCI chairman Miguel Varela, referring to the looming power rate hike of P4.15 per kilowatt-hour. “How else do we picture the heavy toll these will take on the budget of households, enterprises and industries?”

Varela said the surge in the cost of electricity was underestimated by the Aquino administration when it said the increase would only be P1 when it eventually hit P4, similar to how the government responded after Yolanda hit the country.

He said the power cost surge could reduce companies’ margins by 30 percent to 40 percent and this will likely have a serious impact on their cash flows because power bills cannot be paid with credit cards and smaller and medium enterprises may have to lay off workers.

Malacañang clarified, however, that the Energy Regulatory Commission, which approved the rate hike, was an independent agency that is not under the Office of the President or the Department of Energy.

“We understand the sentiment of the public,” said Palace spokeswoman Abigail Valte. “That is why the President has instructed Energy Secretary Jericho Petilla to look into what can be done about this.”

But PCCI vice president for energy and utilities Jose Alejandro said the government was already aware last year that the Malampaya gas field would have to be closed for maintenance, but they did nothing to address the problem.

“It was left with the private sector. The national government did not intervene,” Alejandro said. “Why would I sell to you when I can sell at higher prices at the [Wholesale Electricity Spot Market]?”

Alejandro said the government had a year to temporarily shut down the WESM and compel power producers to sell supply contracts to local distributors or require power suppliers to be responsible for alternative supplies during scheduled maintenance periods.

“They knew the Malampaya was going to shut down for maintenance. They did nothing. They failed to realize that there was no plan,” said PCCI vice chairman Donald Dee, stressing that the government’s “absence” should push them to implement a real solution to the problem.

Even administration ally, Speaker Feliciano Belmonte, wondered why officials of the Department of Energy failed to address the purported cause of the P4.15 per kilowatt-hour hike.

“I think we are justified in wanting to find out what is the real reason?” Belmonte told journalists at a briefing on Friday. “Could we not have anticipated it a few months ago and already prepared the public mind?”

Belmonte acknowledged the need to review the Electric Power Industry Reform Act (Epira) of 2001 amid the purported helplessness of the Aquino administration in dealing with the crisis.

“Yes, I am (for the review of the Epira law),” Belmonte said. “Some people have been talking of revisiting it and I myself think it is a good time to do that and find out if the law is really working.”

Belmonte said the specific amendments to the law would have to be discussed, but he did not discount the possibility that the law may even be rescinded. “Yes, it is something that we should be doing already,” he said.

Bayan Muna Rep. Carlos Isagani Zarate, for his part, said Energy Secretary Jericho Petilla should resign for his failure to cushion the impact of excessive power rate hike imposed by industry giants.

“If the industry giants can only moderate their greed, they can well afford to take a slight decrease in profits in the interest of stable electricity prices and the public welfare,” Zarate said.

“Secretary Petilla should concentrate on how to lower power rates and not in being a spokesperson for the power cartel,” he added.

Zarate also slammed Petilla for dismissing as “minimal” the impact of the “suspicious” unscheduled outages of  big power plants which have caused the power rate hikes.

“The statement of Secretary Petilla is tantamount to saying that it is all right to have a cartel in the power sector and we just have to bear the burden when they collude to increase power rates,” he said.

“Instead of defending the interest of consumers the DOE is more active in protecting the profits of power producers and Meralco, a behemoth in the power industry and one of the country’s top corporations,” he added.

Zarate also called for the scrapping of the “flawed” Epira law. “With EPIRA, private corporate profits are given absolute priority over consumer welfare and economic development, while the state steps aside.” With Maricel V. Cruz

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