With the Philippines known for having one of the most expensive electricity in the region, the Duterte administration aims to deliver on its campaign promise to reduce power rates.
Energy Secretary Alfonso Cusi, shortly after his appointment in July, vowed to bring down the cost of power as a part of the government’s energy reform agenda.
“To reduce power rates is my desire. We will work for it,” Cusi said.
He said bringing down the cost of electricity would require a lot of studies, in all areas—universal charges, power generation, transmission and distribution costs. “We have to review them,” he said.
Cusi, however, faces the challenge of finding a balance between reducing power rates and attracting more investments in power plants to secure future power requirements.
There are also calls for more clean or renewable energy power projects to address the issue of climate change.
Hundreds of renewable energy projects are being lined up across the country, but many of them are now waiting for approval of the latest round of feed-in tariff allocation for solar and wind projects.
The Philippines is also building more coal-fired power projects as developers find it cheaper to build, which is expected to translate into lower electricity cost for consumers.
“President Duterte is correct in saying that the country is still in the process of industrialization. We must therefore use whatever energy resources are available and affordable for power generation,” Cusi said.
“While we signed the Paris Agreement last year committing ourselves to limit our carbon emissions, we cannot ignore the fact that our level of economic development at this point does not allow us to rely completely on renewable energy sources or clean energy,” Cusi said.
He said the Philippines needed diversified energy sources to support economic growth.
Cusi said the agency was still reviewing the National Renewable Energy Board’s proposal to increase the installation target for wind and solar by an additional 500 megawatts—a move that would increase the feed-in tariff allowance charged to consumers.
“We intend to review NREB’s proposal for the following reasons to ensure that power consumers are not unduly burdened with preference for a continuous 24/7 electricity,” Cusi said.
He said “a cost-competitive, effective alternative is to go on open competitive selection process [such as] bidding the right to serve the requirements of distribution utilities and other mandated power industry players.”
Cusi said he would also look at how to bring down the power sector’s debt managed by Power Sector Assets and Liabilities Management Corp.
The Energy Department is also studying ways to use the so-called Malampaya funds to pay off PSALM’s debts. PSALM, which manages the assets and liabilities of National Power Corp., has outstanding debts of about P555 billion.
“I’m looking at it from a perspective of a consumer, not discounting the responsibility to the utilities. I’m just finding a solution,” he said.
“That again is another story how to bring down the debt. There are many ways to reduce the pass-on charges. If we can stretch that out on a longer period of time,” Cusi said.
Cusi said he would also look at the best possible energy mix, while seeking justification for the current mix of 30 percent coal, 30 percent renewables, 30 percent gas and 10 percent other sources.
“As a developing country, we cannot afford not to have coal…We have to find that balance. Not everything is renewable. I’m not against solar but what happens at night time. We have to find a happy balance that we meet the required load, required supply, minimizing smoke emissions, pollution,” he said.
The Energy Regulatory Commission supports Cusi’s bid to reduce power rates. “We will fully support any DoE initiative aimed at reducing electricity rates and will implement national government policies consistent with our mandate to set the rates and protect the interest of the consumers,” ERC chairman Jose Vicente Salazar said.
Salazar assured power consumers that the regulator was finding ways and means to guarantee that only just and reasonable costs were reflected in their electricity bill.
He said the agency would also scrutinize petitions for power adjustments. PSALM wanted to recover some P27.7 billion of the National Power Corp.’s stranded debt portion of the universal charge for the Luzon, Visayas, and Mindanao grids for 2015.
Salazar said ERC was closely scrutinizing the petition and would undergo due process before rendering a decision on the case.
“The ERC is studying the case meticulously and with a lot of caution since the petition is for pass-on charges. The case will have to be evaluated on the basis of reasonableness and affordability,” Salazar said.