Ecozones’ subsidized electricity over

THE government will no longer provide discounted electricity to economic zones under the franchise area of Manila Electric Co. by December.

“Although we fully understand the possible implications of this decision to the economy, it is no longer reasonable for us to renew the power supply contract with Meralco given the limited supply that PSALM currently has and the high operating costs of generating power from the remaining PSALM-owned plants in Luzon,” Emmanuel Ledesma, Jr., Power Sector Assets and Liabilities Management Corp. president, said.

Earlier, Meralco, the Philippine Economic Zone Authority and members of the Semiconductor and Electronics Industries in the Philippines Inc. asked for the retention of the power rate discount inside economic zones until December 2012.

The discounted rates were brought about by a memorandum of agreement between Meralco and state-owned National Power Corp. in 2007.

The program benefited 279 customers in industrial areas, representing 43 percent of total manufacturing exports valued at about $19 billion. These industries provide more than 222,213 jobs.

Ledesma said PSALM cannot continue with the discounts because Meralco and Napocor’s contract will expire on December 25., or a day prior to the date regulators set for the start of open access in the power sector.

Mandated under the Electric Power Industry Reform Act of 2001, open access will allow qualified consumers to choose their suppliers in lieu of distribution utilities sourcing electricity on their behalf.

The scheme aims to spur competition in the power generation sector, which was once controlled by Napocor. Since the passage of EPIRA, the bulk of the latter’s power plants have been privatized to pay for its debts.

“Upon expiration of the Meralco power supply contract, the customer is free to contract and negotiate with any power producer. As with any power supply contract, the power rate will depend on the contractual agreement between the parties,” Ledesma said.

He said Napocor has ceased to become the sole supplier of electricity to ecozones after majority of the company’s plants were privatized.  –Euan Paulo C. Añonuevo Reporter, Manila Times