05 September 2004
Filipino consumers have been paying for the monumental mistakes, disastrous policies and gross mismanagement of the power industry for a long time. And now, the government wants to inflict more pain. Just yesterday, the Energy Regulatory Commission (ERC) announced that it is granting the National Power Corporation (NPC) a provisional increase of P0.98 per kilowatt hour for all grids.
Everyone is familiar with this story by now. NPC is losing money because for every kilowatt hour it pays Independent Power Producers (IPPs) to deliver, it is paying almost the same amount for electricity that is neither used nor produced.
They have been charging us for a big part of this undelivered electricity until the publicity stunt by President Arroyo last June 2002 when she reduced the PPA but did not change the contracts with the IPPs. This led to more losses for NPC which we will now pay for with this 98 centavo increase.
Government's own review of these IPP contracts in 2002 revealed that at least five are clearly onerous while twenty-four have serious financial and legal issues. Today, not a single onerous cont0ract has been rescinded. They claim to have generated $1.04 billion savings from renegotiations with the IPPs but this translates to only less than 10 centavos reduction per kilowatt hour if applied to power rates. We will not even enjoy this small reduction because they claim that the savings will only go towards covering part of previous losses.
The rates increase of Napocor, be it P2/kwh, P1/kwh, or lower, is unjustifiable. Consumers should not be made to bear any more additional burden from the flawed decisions of the government and of its onerous transactions with the private sector.