Aquino commits to act on high power rates in PH

President Aquino on Thursday assured local and foreign investors that the government is moving to ensure fair and competitive power rates in the country to boost the competitiveness of local industries.

Speaking before members of industry groups and foreign chambers at the Arangkada Philippines Forum Thursday, Aquino explained that among the necessary steps being undertaken by his administration were securing investments for baseload power plants, the continued operations of the wholesale electricity spot market and fast-tracking the start of the open access and retail competition regime.

According to Aquino, the government plans to start implementing open access by August this year, an ambitious goal according to some observers given that the Department of Energy has yet to secure the infrastructure and other necessary mechanisms that will allow this scheme to proceed smoothly.

Under the open-access regime, large power users will be able to choose their own electricity suppliers, unlike under the current system where they are limited to the supplier that has jurisdiction over their respective areas.

The open-access regime is expected to spur greater competition among power stakeholders, resulting in more competitive electricity prices.

Eventually, the scheme will be extended up to the retail level or households.

The August target was also confirmed by Energy Secretary Jose Rene D. Almendras, who also announced that the much-awaited feed-in tariff (FIT) rates will likely be finally issued this year—a move that is expected to propel huge investments in the local renewable energy sector.

“It should happen soon. There are ongoing discussions to bring all parties together… (The issuance of FIT rates) will happen a lot sooner than expected,” Almendras said.

The issuance of the feed in tariff rates is among the critical considerations in a renewable energy project as these will determine if a project is economically feasible and viable. These will likewise assure developers of future cash flows since electricity end-users will be charged fixed amounts to cover production of energy from renewable sources.

However, a number of business and cause-oriented groups, and even government agencies, have earlier come out to protest the proposed feed-in-tariff rates, as these will result in additional charges, to be called the FIT-allowance, which will be collected from all electricity consumers.

The country’s high electricity rates were cited as among the major factors hindering the competitiveness of Philippine industries.

Almendras, however, debunked such a “myth,” pointing out the case of Singapore, whose industries pay higher electricity rates.

“But still, industries flock to Singapore. There are other things that affect investments,” he noted.