ERC: Power rates to go up further

Published by rudy Date posted on May 25, 2011

MANILA, Philippines –  The cost of electricity in the country, already the second highest in Asia next to Singapore, will go up further, energy officials told the House committee on energy yesterday.

The committee chaired by Batanes Rep. Henedina Abad, in the course of its hearing on the energy situation, endorsed a consolidated bill extending the power rate subsidy program for the poor by another 10 years.

The program is expiring next month, 10 years after the enactment of the Electric Power Industry Restructuring Act (EPIRA) of 2001. It covers those with electricity consumption of up to 100 kilowatt-hours (kwh) a month.

Abad and Representatives Ben Evardone of Eastern Samar and Rufus Rodriguez of Cagayan de Oro City are the principal proponents of the 10-year extension.

After the committee voted to endorse the consolidated bill, Energy Regulatory Commission (ERC) executive director Francis Juan briefed the panel on the impact of the entry of renewable energy investors into the power industry.

He said rates would surely go up since renewable energy is much more expensive than conventional power generated from crude oil, coal, water, and natural gas.

He said based on the ERC’s initial computations, electricity produced from ocean waves would cost P17.65 per kwh; from sunlight, P17.95; and from wind, P10.37.

“These are just proposed rates, which will still be subjected to public hearings,” he said.

He added that potential investors are waiting for the rates to be approved before spending their money on the renewable energy projects.

The present average cost of electricity generated from a mix of crude oil, coal, water (hydro), and natural gas is about P11 per kwh.

Evardone said the proposed rates are “unacceptable” since people are already reeling from the high cost of electricity.

He said when Congress enacted EPIRA in 2001 and the Renewable Energy Act in 2008, the general expectation was for electricity rates to go down.

“But they are going up, instead of going down,” he said.

He pointed out that the renewable energy law gives investors a lot of incentives, including income tax exemption and duty-free importation of equipment, so they could offer electricity at a low price.

He added that present and new players in the power sector are lobbying for higher renewable energy rates so they could earn billions in net profits.

Leyte Rep. Sergio Apostol said the impending increase in rates “is totally wrong.”

“Instead of helping consumers, we are adding more burden to them,” he said.

Rep. Arnel Ty of the party-list group Liquefied Petroleum Gas Manufacturers Association said since non-traditional energy sources are expensive, the government might as well stick to conventional sources.

He said higher rates could scare away investors and could drive more people deeper into poverty.

Commenting on the lawmakers’ statements, Energy Undersecretary Ina Asirit said using traditional or renewable energy is a policy issue which Congress and the executive branch have to decide.

She said the present law mandates the use of non-traditional energy sources. –Jess Diaz (The Philippine Star)

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