Ecozone locators to get discounted power rates until 2012—PSALM

MANILA, Philippines— State-run Power Sector Assets and Liabilities Management Corp. will continue to provide discounted power rates to economic zone locators up to next year, a move seen to help boost competitiveness of Philippine manufacturers.

PSALM president and CEO Emmanuel R. Ledesma Jr. in a statement issued Friday explained that the corporation has finally decided to extend its transition supply contract with power distributor Manila Electric Co. for a maximum period of one year or until three months after the introduction of open access and retail competition, whichever comes earlier.

The supply contract, which is being implemented under the Ecozone Rate Program, was supposed to have lapsed by Dec. 25 this year.

According to Ledesma, the decision to extend the transition supply contract with Meralco was made to ensure stability of electricity prices charged to consumers.

The decision was reached with the approval of the PSALM Board of Directors which consists of the heads of the Department of Energy, the Department of Finance, and the Department of Trade and Industry, he added.

Ledesma clarified that PSALM decided to reconsider its decision due to various factors, which include the deferment of the implementation of open access and retail competition to October next year.

Also, Meralco is still in the process of securing the approval of the Energy Regulatory Commission for its bilateral power supply contracts with private generating companies that are intended to replace the original five-year transition supply contract with PSALM, which was supposed to have expired this month.

Ledesma added that without the approved bilateral contracts and the transition supply contract, Meralco will be exposed to volatile market risks as Meralco has no recourse but to acquire its power supply from the Wholesale Electricity Spot Market where prices tend to be higher at times, Ledesma said.

Meralco will then have to pass on the higher costs to its estimated 5 million customers–a situation that the government wants to avoid, he further said.

“The extension of the TSC is mainly for the benefit of the companies operating in the economic zones enjoying discounted power rates,” Ledesma said.

This decision addresses the request of the Philippine Economic Zone Authority and the Semiconductor and Electronics Industries in the Philippines Inc., to retain the power rate discount inside the economic zones so as not to hamper the investment climate in the country and displace millions of workers employed in these companies.

Ledesma also pointed out that the extension of the TSC for the benefit of the ecozone locators is also part of an investment stimulus package that the national government is finalizing.

The discounted power rates offered to locators under the ERP is said to be benefiting 279 Meralco customers in industrial areas, which account for 43 percent of the country’s total merchandise exports or about $19 billion.