COMPANIES OPERATING in public economic zones can now enjoy a simplified version of the "open access" power supply scheme, after the Energy Regulatory Commission (ERC) ceded jurisdiction over power use in ecozones to the Philippine Economic Zone Authority (PEZA).
Under this scheme, electricity users may choose their suppliers.
With a complete set of guidelines in place, the PEZA is merely waiting for the expiration of bulk, long-term supply contracts before its locators can commit to retail arrangements with the electricity supplier of their choice.
MoA rescinded
A memorandum of agreement (MoA) signed by ERC and PEZA in 2004 — but rescinded by both parties last Feb. 29 — had recognized the ERC as the power sector’s regulator, within and outside ecozones, as prescribed by the Electric Power Industry Reform Act (EPIRA).
"At top-level discussions in the energy family, we agreed that the memorandum of agreement made it difficult for PEZA to exercise our mandate per our charter," PEZA Deputy Director for Policy and Planning Jesus S. Sirios said in an interview yesterday.
"Now that [the MoA] has been rescinded, the PEZA charter holds and it clearly says we can regulate the [power] utilities inside ecozones," he added.
Not automatic
ERC Commissioner Saturnino C. Juan, however, clarified that annulling the MoA will not automatically cede this authority to PEZA.
"Let the judicial branch decide on that," he said yesterday, referring to a court case filed by distribution utilities that questioned PEZA’s ability to ensure competition.
But even as the case drags on, ecozones not served by those private utilities involved in the case could immediately implement PEZA’s open access rules, he added.
Through two resolutions and ratified guidelines, PEZA has opened choices for supply, metering and distribution services within ecozones.
Components hooked up to external infrastructure, such as transmission and generation, will still be regulated by the ERC
Power price cuts
Power expert Fernando Y. Roxas of the Asian Insititute of Management estimates that power rates will fall by P1 per kilowatt-hour-P1.30/kWh if open access were fully in place. "The distribution rates have recently been unbundled, this January. And in Bataan [Economic Zone], the reduction was 19.73 centavos/kWh. In Cavite [Economic Zone] it was 16.19 centavos/kWh," he said.
Based on a comparative table, Mr. Roxas concluded the "total distribution charges collected by Meralco [Manila Electric Co.] from private ecozones are higher than charges collected by PEZA."
However, PEZA currently contracts supply for its locators in public zones.
For instance, Mr. Sirios said, only when the power supply agreement with the National Power Corp. (Napocor) lapses this Dec. 26 can the Bataan Economic Zone immediately declare an open access regime operational.
The Cavite ecozone can follow in 2011, but the last contract will expire in 2022, he added.
Thorn
For private ecozones, an existing preliminary injunction granted to Meralco and Private Electric Power Operators Association, Inc. (PEPOA) against the PEZA guidelines and regulatory authority is proving to be a large thorn, said Mr. Roxas.
"PEPOA [Private Electric Power Operators Association, Inc.] would like to get out of the supply chain because that is how it is in open access. There is freedom of choice, and as a regulator we cannot be the default supplier," he said.
"PEZA has been unable to introduce competition in private ecozones because of the case."
Meralco, which last year grew its electricity business by 4.6% partly due to a dedicated foray into ecozones, is questioning PEZA’s redundant role.
In an earlier position paper, the firm has called this case the "rumblings of instability" and has insisted that EPIRA clearly installs ERC as the lone regulator.
Victor B. Santos, an executive of fellow Lopez-led First Gen Corp., meanwhile said, "The lower rates come from generation companies, not from PEZA. PEZA can only promise it can offer lower rates if they give subsidies, etc. [But this] distorts prices, and all the while we believed that part of the restructuring is to reflect the true costs of power."
Mr. Santos also alluded that early or separate open access contradicts the wisdom behind EPIRA. "To have true competition, Napocor should [control] 30% or less. But now, the fact is that [Napocor] is still a player, and the profits of its independent power producers all fall into the same balance sheet," he said.
Open access was originally envisioned for implementation in the whole Luzon grid, following the full deregulation and establishment of a competitive power market.
The government, however has stumbled on the privatization requirement for Napocor assets, but is still promising the target of 70% of generating capacity sold could be met by September.
