“Unmasking the true Costs of Electricity in the Philippines”

Ciudad Christhia, San Mateo, Rizal
25-27 January 2011

I. Introduction

The problem on access to electricity. An average 40 percent of households in the Philippines have no electricity. In poor areas like the Autonomous Region in Muslim Mindanao, the majority—70 percent—are without power. Development projects and programs will continue to be hampered due to this negative condition. While the government claims to have energized most if not all barangays, the question of access to electricity is a serious issue of poverty and a major development concern.

The continuing impact of expensive electricity costs. Those who have access to electricity suffer from expensive monthly bills. Expensive electricity is an issue that cuts across all income classes and sectors. Aside from poor families, foreign and local (economy) businessmen are likewise complaining of high and increasing electricity costs that contribute to the uncompetitiveness of their products in global markets. For example, the semiconductor industry, which is the leading export industry in the Philippines, spends around 20% to 45% of its operating expenses on electricity. For the textile industry, electricity costs constitute approximately 30% as compared to Indonesia (12%) and Malaysia (10%).

The Electric Power Industry Reform Act (EPIRA) was signed into law purportedly to bring electricity rates down. However, nine years after its passage power rates have risen by 100 percent. In the Meralco franchise area electricity rates moved from PhP5.65 per kWh in 2001 to PhP11-PhP12 per kWh today. The ever-increasing power rates will surely eat into and erode the purchasing power of ordinary consumers.

There is an inadequacy of power supply. During the first quarter of 2010, we had a series of power “blackouts” and power outages in different parts of the country especially in Mindanao but even in Luzon where there is excess capacity. The power shortage in Mindanao has been attributed to the drought caused by global warming, bringing the level of water reserves to their lowest in recorded history. In fact, there was even a move to declare a state of emergency that would empower the Chief Executive to exercise a special power under EPIRA in order to immediately address the troubled condition.

Similarly, in some areas in the Visayas region, a panic situation ensued when peak demand continued to rise despite a very huge amount of supply from geothermal power. However, due to the low quality and capacity of the transmission lines it failed to transmit the large source of supply from this type of energy source to the major islands of the said region particularly in Cebu City which is considered as the most urbanized center and peak demand is considered the highest.

While in Luzon, we experienced power supply “shortages” primarily due to power plant maintenance schedules and on the same period the situation was exacerbated by inefficiencies and mismanagement such as putting a wrong quality of coal to some pivotal supplier (Limay and Sual) which ultimately caused a level of alarm particularly during the mid-part of the recent national campaign election period. This was compounded by an allegations that there was an intentional shut-down of operations of some power plants in order to dispatch and/or to favor power plants as part of the “price manipulation schemes” inside the WESM.

Finally, the situation mentioned above calls for the public in general and electricity consumers in particular to be more vigilant and informed with regard to electricity pricing and supply issues. This is important because ordinary consumers tend to fall under the “captive or uncontested market” of the profit-driven power sector. For this reason, the FDC will initiate a “National Electricity Consumer Conference” that aims to build on past and current efforts from a broad group of stakeholders in the power sector, and collectively attempt to address the fundamental issues regarding the electric power industry specifically on high costs of electricity, supply and the right to access.

II. Objectives
  1. To educate consumer groups and other stakeholders on pressing issues concerning the power industry such as electricity rates and issues in the supply sector that largely affects the consumers.
  2. To build unities among the stakeholders in the power industry on ways to reduce electricity rates, strengthening of consumer ownership and participation in their rural electric cooperatives (RECs) and private distribution utilities (PDUs), and on an alternative framework for clean, affordable and reliable energy in the context of the changing climate.
  3. To be able to draw responses from concerned government agencies such as the Department of Energy (DoE) and the Energy Regulatory Commission (ERC) on issues raised during the conference.
  4. To develop a resolution based on the unities achieved during the conference and develop a working plan based on items 2 and 3 as listed above.

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