* This is my article in BusinessWorld last February 01, 2019. It is a web version only and not published in the print edition due to space constraints that day.
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The Philippines’
expensive electricity is largely caused by 9-10 different charges slapped on
our monthly electricity bill. As mentioned in an earlier paper in this column,
“Walang forever, universal charge in electricity and PSALM” (January 15, 2019),
these are: generation charge, transmission charge, distribution charge, supply
charge, metering charge, system loss charge, universal charge, feed in tariff
allowance (FIT-All), VAT and other taxes.
The universal charge (UC), currently 37.9 centavos per
kWh, is composed of four items – Napocor’s Stranded Contract Cost (UC-SCC) and
Stranded Debts (UC-SD), Missionary Electrification (UC-ME) and Environmental
Charge (UC-EC). The SCC is now the biggest item of these four but SD will shoot
up in the coming years because there is still P466.2 billion of Napocor’s
remaining debt.
So the bad news is that UC fund administrator, Power
Sector Assets and Liabilities Management Corporation (PSALM), projects that it
will collect UC 86.0 centavos per kWh from 2020 – 2026.
But there is good news, a pending legislation, SB 1950 or
the “Murang Kuryente” bill by Sen. Sherwin Gatchalian, which proposes to use
the net government share from Malampaya royalty to pay the UC-SCC and UC-SD.
The Committee Report was passed on 2nd reading in the Senate on Wednesday,
January 30.
In a presentation during Stratbase-ADRi’s “Energy
Outlook” forum on September 28 last year, Senator Gatchalian showed these
numbers if Malampaya fund collection of P204 billion is used to pay the UC-SCC
and UC-SD.
Consumer savings of using Malampaya fund for UC, in
centavos per kWh
That 84.74 savings would spare a household with average
monthly consumption 200 kWh of
P169/month or P2,034/year in savings, equivalent to one sack of rice.
But consumers still have to pay, in centavos/kWh: (a)
1.26 balance for UC-SCC and SD, (b) 15.61 UC-ME, and (c) 0.25 UC-EC, or total
17.12. Over the long term, these should be abolished too. Modern technology
will allow isolated islands to have reliable, 24/7 electricity off-grid by
tapping various energy sources, both conventional and renewables.
On January 24, the Senate Committee on Public Services
conducted a public hearing on various franchise bills that were passed on 3rd
reading in the House of Representatives. Among those bills is HB 8179 or the
Solar Para sa Bayan Corp. (SPBC) franchise.
I wrote to Senator Grace Poe, Chairperson of the
Committee. I pointed out certain sections of the bill that are cronyism-seeking
and anti-consumers. I post portions of my letter below:
Section 1, “… franchise to construct, install, establish,
operate, and maintain… distributable power technologies (DPTs) and minigrid
systems… in any areas to be determined by the DOE, which shall include unserved
areas and underserved areas throughout the Philippines… access to any
transmission or distribution system… eligible to become a member of the
wholesale electricity spot market…”
Why grant a nationwide, unlimited scope, coverage and
execution for this special corporation? It can choose any area in the
Philippines like a fast-growing tourism and industrial zone and do business
there on the pretext that it is an “underserved” area. It can overlap service
provision with existing DUs even though such overlap is not allowed that is why
they are given a specific, non-infringing area franchise.
Why automatic membership in WESM? Currently, only
ERC-authorized players can become WESM members. The bill allows SPBC to ignore
ERC requirements for WESM membership.
Section 5. “… The grantee shall charge reasonable and
just power rates for its services to all types of consumers…”
Solar + genset power is not cheap, it will be expensive
to the public. Solar + battery is also not cheap. Solar does not generate
electricity at night, or hardly generates power at daytime when there are thick
clouds and heavy rains. The company will be relying on gensets running on
non-greenie diesel power.
Section 15. “The grantee shall submit an annual report to
the Congress of the Philippines…”
SPBC really intends to go around ERC regulations and go
straight to Congress. ERC monitoring is more technical and focused while
Congress monitoring is less technical and scattered with so many political
concerns.
Overall, HB 8179 is deceptive. SPBC’s marketing and
selling point to the public is that it is a greenie solar power-generation
company. But its franchise bill says that it is a nationwide, unlimited generation-distribution
company.
A good solution for this kind of bill is to junk and
reject it. But it is not practical politically because it was passed quickly at
the House of Representatives, which indicates the measure’s wide political
connection.
A compromise solution is to limit the unlimited scope,
denationalize the nationwide coverage which the bill seeks. Put it under the
technical monitoring and permitting of the ERC, not under Congress. No
automatic membership in WESM so that it must get ERC authorization first, and
when it misbehaves after being admitted it can be kicked out of WESM too.
See also:
BWorld 287, Public transport mess and traffic congestion, January 26, 2019
BWorld 288, Economic prospects 2019 and cement tariff, January 28, 2019
BWorld 289, Growth by elections and FDIs by PSA liberalization, January 31, 2019
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