PSALM extends discount to ecozone firms

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

In a statement issued on Friday, PSALM president and CEO Emmanuel Ledesma Jr. 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 (ERP), was supposed to lapse on Dec. 25 this year.

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

The decision was reached with the approval of the PSALM board, which consists of the heads of the department of energy, finance, and trade and industry, he added.

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

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

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

Meralco would then have to pass on the higher costs to its estimated five million customers, a situation that the government wanted 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.

The decision addressed 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 pointed out as well that the extension of the TSC for the benefit of the ecozone locators was also part of an investment stimulus package that the national government was finalizing.

The discounted power rates offered to locators under the ERP is believed 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.