Prof says power rate hike would continue to be felt

by Liza Agoot

UP DILIMAN, Quezon City – Contrary to the objective of the Electric Power Industry Reform Act (EPIRA) to bring down the cost of electricity, the cost of power in the country continues to increase.

Prof. Rowaldo Del Mundo who gave a three-day seminar on the subject EPIRA 101 to board members and employee representatives of the electric cooperatives in the country said that power rate hike will continue to be experienced.

The seminar is part of the competency training and certification program in electric cooperative power distribution system engineering given by the National Electrification Administration in cooperation with the National Engineering Center of the University of the Philippines Diliman.

The Philippines, Del Mundo said, has the second highest power rate compared to other countries all over the world.

The increase in power cost, he said, is brought about by the privatization of the generation companies, which were earlier tagged to address the high cost of power in the country.

He explained that one-third of the country’s debt was incurred by the National Power Corporation (NPC) in constructing power plants. Instead of the power plants becoming assets after many years, 91 percent of them have become liabilities.

Del Mundo said that solving the NPC’s indebtedness will actually solve one-third of the country’s indebtedness from international financial institutions.

He further said that privatization can greatly solve the problem.
However, in selling the generation companies, the government tagged a price about 300 percent higher than the cost that one will incur when it decides to build its own generation plant.

He took as an example the 15-year-old Masinloc power plant which has an economic lifespan of 30 years. Its price is US $270 million but was sold at US $930 M.

“Where do you expect the investor to get the return on investment?” The professor said, “Naturally, from the power that will be delivered.”

He said that privatization of the NPC power plants is still about 51 percent. By 2009, privatization could have reached more than 70 percent.

The generation cost as of this time, Del Mundo said, remains to be regulated. However, it is expected that at 70 percent privatized, the generation cost will start to be deregulated, leading to uncontrolled rates.

Looking at the electric bill, he said, generation cost is about 70 to 80 percent of the cost of power paid by the consumers.

“There is no way to go but to balloon the rates,” he said.

However, the phenomenon of privatization, he added, can be battled.

“Electric cooperatives can help solve the problem by engaging in generation. Look at the viabilities of the rivers in your area,” he said.

Cooperatives, he said, are non-profit by nature compared to private utilities. “When rates are perpetuated by private utilities, the coops will have to show the actual costs and by nature cannot have pro-fits,” he said.

He encouraged cooperatives to empower themselves, improve their system and never say “we don’t have money,” whenever requests for power lines in un-electrified areas as well as in industrial areas come in.
There are ways on how coops can cope with the demand for power without necessarily having to tremendously increase power rates.

Del Mundo said, the Benguet Electric Cooperative, which he has been supervising for more than three years now as a consultant, continuously improves itself in terms of manpower skills and capabilities as well as system upgrade.

This is the reason why Beneco, while not perfect, tries its best to provide a good service to the consumers, as well as continues with its missionary goal to provide electricity to all areas covered by the franchise. (BaguioMidlandCourier)

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