Big power users back open access scheme

Posted at 03/02/2008 3:09 AM


The Philippine Star

A group of heavy power users in the country is open to the idea of an interim open access scheme intended to lower power rates.

The Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI), through its president Ernesto Santiago, said the terms of reference (TOR) for the interim open access has already been signed. SEIPI is the largest organization of electronics companies in the country.

Former Energy Secretary Vince Perez has been tasked by President Arroyo during the recently concluded Energy Summit to explore the possibility of implementing open access without amending the Electric Power Industry Reform Act (EPIRA) of 2001.

With this mandate, Perez now "has the ball in his hands" and file the proposal with the Energy Regulatory Commission (ERC), Santiago said.

Perez is now reportedly coordinating with the Department of Energy (DOE) to craft an acceptable mechanism to implement an early open access scheme to allow the public the power to choose their own electricity supplier.

Under the EPIRA, open access cannot be implemented until certain pre-conditions are met, one of which is the privatization of 70 percent of the generating assets of the National Power Corp. in Luzon and the Visayas.

Sources in the power industry said that as envisioned in the EPIRA, a government firm should not be competing with the private sector as the state-owned company could always offer subsidized prices.

"Such a set-up will not encourage investors to come in. Proof of this is that prices in the Visayas are so low," a source said. "It’s ok to have open access as long as there is already a level playing field."

According to Santiago, the TOR will cover power users with consuming at least one megawatt (mw) with an 80 percent load factor.

After six months, the "contestable market" or the electricity users who have the power to choose their own electricity suppliers, will be expanded to those consuming at least 750 kilowatts per month.

Santiago said the state-run National Power Corp. (Napocor) will be excluded in the list of power generators that will offer open access to one-mw users as it is not yet fully privatized.

The SEIPI official added that once full open access kicks off, they are looking at a pricing benchmark lower than the P3.52 per kilowatthour being offered by Napocor.

SEIPI has been urging government to find ways to lower power costs as it is a significant cost shouldered by the industry. The electronics industry accounts for over $31 billion or two-thirds of total Philippine exports of merchandise goods and directly employs over 450,000 engineers, technicians and operators.

SEIPI’s members include foreign and Filipino global players like Intel, Texas Instruments, Hitachi, Fujitsu, Toshiba, NEC, Philips, Samsung, Analog Devices, Fairchild, Sunpower, Cypress, Lexmark, Amkor Technologies, IMI, Ionics, and PSI Technologies.

The ERC has already come up with the rules on open access wherein customers of private utilities and electric cooperatives and the economic zones in the Luzon grid with an average demand of one mw per month will initially benefit first from the first year of implementation of open access.

Under the EPIRA, the ERC was directed to determine the timeline and officially declare the implementation of open access. The second phase of open access "shall occur two years after the first phase," with the threshold level down to 750 kilowatts.

The threshold level shall be gradually reduced until it reaches the household demand level within a period of seven years. Thus, seven years after the second phase, the contestable market shall cover end-users at the household level.

Perez, for his part, earlier said that "an interim form of open access can be implemented earlier, to be sourced from the now privately-owned generating power plants of Ambuklao, Binga, Magat, Masinloc, Pantabangan and the excess capacity of Sual."

"The combined capacities of these plants are significant enough to foster industry competition," Perez said.

Government has already successfully auctioned off several power plants: the 112-mw Pantabangan-Masiway hydropower complex won by First Gen Corp.; the 600-mw Masinloc power plant won by AES Corp.; the 175-mw Ambuklao Binga hydropower complex and the 360-mw Magat power plant, won by SN Aboitiz Power Corp., and the 600-mw Calaca power plant won by Suez-Tractebel.