Philippines must lower power rates to compete in ASEAN region

Philippines must lower power rates to compete in ASEAN region

Consumers will have to pay P1 per kilowatt-hour more early next year due to
the maintenance shutdown of the Malampaya gas-to-power facility, but an
industry expert contends that the Philippines must in fact lower the current
cost of electricity by at least 30 percent to be competitive within the
ASEAN region.

Electricity rates in the Philippines have registered increases higher than
the inflation rate, with the average annual changes for residential
customers up by 8.73 percent from 2004 to 2011, while the inflation rate was
4.83 percent on average in the same comparable period, said Rowaldo R. Del
Mundo, associate professor at the University of the Philippines Diliman.

"Target power rate reduction: 30 percent of current power rates (P3.00 per
kilowatt-hour)," Del Mundo noted in an emailed presentation "Understanding
and Reducing Power Rates in the Philippines."

Del Mundo is an associate professor at the UP Electrical and Electronics
Engineering Institute. His focus is on power systems, electricity markets
and regulation, as well as energy planning.

He also authored the Philippine Grid and Distribution Codes used by the
Energy Regulatory Commissioner (ERC) as part of the technical implementing
rules and regulations of Republic Act 9136 or the Electric Power Industry
Reform Act of 2011 (EPIRA).

Compared with Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
Singapore, Thailand, and Vietnam, electricity rates in the Philippines are
nearly twice higher than the average price in the region, Del Mundo said.

According to the professor, the Philippine residential rate was $0.2483 per
kWh in 2011, compared with a regional average of $0.1349 per kWh.

Del Mundo noted the individual residential rates in other Asean member
states as follows:

$0.1911 per kWh in Brunei
$0.1585 per kWh in Cambodia
$0.1474 per kWh in Indonesia
$0.9590 per kWh in Laos
$0.1146 per kWh in Malaysia
$0.3090 per kWh in Myanmar
$0.1976 per kWh in Singapore
$0.9900 per kWh in Thailand
$0.9170 per kWh in Vietnam

The Department of Energy (DOE) said late last week that electricity rates
are expected to go up by P1 per kWh due to the scheduled maintenance
shutdown of the Malampaya gas-to-power facility early next year.

The DOE statement comes on the heels of a separate announcement by the
Manila Electric Company (Meralco) that residential customers will have to
pay P0.1011 per kWh more or P8.36 per kWh this month because of a weaker
peso against the US dollar.

To be able to lower electricity rates, Del Mundo said the government must
push for a mandatory public bidding of power supply for the captive
customers of distribution utilities like Meralco.

The supply contracts should be able to secure both long-term and short-term
needs of distributions utilities to ensure supply security by having two
different contracts to meet the long-term and immediate needs of power
utilities.

Del Mundo noted that distribution utilities must be required to submit a
schedule of supply procurement to the DOE and ERC, otherwise the government
would have to set the schedule of buying the short-term and long-term
electricity supply.

ASEAN is the Association of Southeast Asian Nations which counts as members
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand and Vietnam.

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Link to Original Article:
http://www.gmanetwork.com/news/story/593819/money/economy/phl-must-lower-pow
er-rates-to-compete-in-asean-region

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com