19 IPPs overpaid by $10B

THE government overpaid 19 independent power producers (IPPs) by $10 billion in the last 10 years, a House leader said on Tuesday.

This was revealed by Rep. Roilo Golez of Parañaque City (Metro Manila), also the vice chairman of the House Committee on National Defense and Security, after the House energy panel’s investigation of the rationale behind the filing of an application for a universal charge of P0.39 per kilowatt hour.

Golez said that the government overpaid the IPPs by $10 billion based on normal costing and such amount, he added, could translate to 10 power plants.

“The amount ($10 billion) is already enough to take care of our power needs in 10 to 20 years,” he noted during the weekly Ugnayan sa Batasan News Forum.

Golez cited the Philippines earning the dubious distinction of having the highest electricity rates in Asia—18.1 cents per kilowatthour, which is even higher than Japan’s rate of 17.9 cents per kilowatt hour.

The IPPs average rate, he said, is 20 cents per kilowatt hour.

“You can see the differences that are burdensome to our people as far as universal charges are concerned,” the lawmaker added.

Having learned of the overpayment, the House energy panel, on Golez’s motion, ordered the Department of Energy and the Power Sector Assets and Liabilities Management to renegotiate the contracts of the 19 IPPs.

Apart from the renegotiation of the contracts, the energy committee also carried a motion of Rep. Teodoro Casiño of Bayan Muna party-list to suspend hearings of the Energy Regulatory Board on universal charges.

Moreover, Casiño urged the government to allow immediate installation of 200 kilowatts of solar power to reduce the expensive peak power rates offered by the Wholesale Electricity Spot Market (WESM).

He argued that the solar industry had shared its findings with the government on alarming prices at WESM, particularly from May to July this year, where clearing prices have been above P10 per kilowatt hour, spiking to as much as P19 per kilowatt hour in June.

WESM is a venue where electricity made by power-producing companies are centrally coordinated and traded like any other commodity in a market of goods in a level playing field and prices are driven by the law of supply and demand to buyers with the objective of giving the best price for consumers of electricity including the ultimate end-user.

Last year, WESM prices reached as high as P60 per kilowatt hour (February) to a low of P35 per kilowatt hour (September).

“Solar (power) will prepare the country for the summer months and arrest a possible increase of peak power prices next year in WESM. If the government is serious in implementing the Renewable Energy Law, it has to accelerate its permitting process, start awarding solar service contracts and allow homeowners and commercial establishments to produce their own power needs by using their rooftops (to tap solar energy),” Casiño said. -LLANESCA T. PANTI REPORTER, Manila Times