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Ecozones still need subsidies­ — Meralco

Posted May 3rd, 2012 by Alena Mae S. Flores
[ ] May 3, 2012

Power distributor Manila Electric Co. said Wednesday large industries operating in economic zones still need subsidies to mitigate the high power rates, even after the lapse of a discounted rate program in December.

“This economic sector may require continuing support,” Meralco chief operating officer Oscar Reyes told reporters at the sidelines of the host country forum sponsored by the Management Association of the Philippines during the 45th annual meeting of the Asian Development Bank in Pasay City.

The ecozone rate program, which provides subsidized electricity rates to 279 customers that account for $19 billion or 43 percent of manufacturing exports and employ 222,213 individuals, is set to lapse in December this year.

Reyes said Meralco had started signing supply contracts with power generating firms in anticipation with the lapse of its transition supply contract with National Power Corp. in December.

Meralco has signed several contracts covering over 2,380 megawatts at competitive rates. Reyes said the contracts will help Meralco “contain the rising power rates.”

He said large industries were expected to contract their power requirements through bilateral agreements under the open access and retail competition regime, but it would be hard to match the rates offered by Napocor.

The government wanted to put in place open access, which would give large power users the option to choose their own power supplier by the third quarter.

“There is a concern, whether we will be able to match or give better ecozone rates without continuing subsidy. What will be the price of these bilateral contracts,” Reyes said.

Napocor and Meralco began providing a special rate to accredited industries located inside the ecozones in 2007. The special rate offered a discount of as much as P1 per kilowatt hour to industries located within the ecozones under the Meralco franchise area.

Power Sector Assets and Liabilities Management Corp. agreed to extend the ecozone rate program, under its transition supply contract with Meralco until December or until three months after the introduction of open access and retail competition, whichever comes earlier.

(Published in the Manila Standard Today newspaper on /2012/May/03)

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